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Brexit will be delayed, quite possibly indefinitely. May’s looking for a way to achieve this while putting the blame on anyone but herself. She survived this votes only becasue of the DUP, whose votes she bought. Welcome to democracy.

Theresa May has survived as prime minister after weathering a dramatic no-confidence vote in her government, but was left scrambling to strike a Brexit compromise that could secure the backing of parliament. In a statement in Downing Street on Wednesday night, the prime minister exhorted politicians from all parties to “put aside self-interest”, and promised to consult with MPs with “the widest possible range of views” in the coming days. It followed her announcement that she would invite Jeremy Corbyn and other party leaders for immediate talks on how to secure a Brexit deal, something she had declined to do earlier in the day, although Labour later said Corbyn would decline the invitation unless no-deal was taken off the table.

A day after overwhelmingly rejecting her Brexit deal, rebel Conservatives and Democratic Unionist party (DUP) MPs swung behind the prime minister to defeat Labour’s motion of no confidence by 325 votes to 306 – a majority of 19. In her late-night statement, the prime minister said: “I am disappointed that the leader of the Labour party has not so far chosen to take part – but our door remains open … It will not be an easy task, but MPs know they have a duty to act in the national interest, reach a consensus and get this done.”

The Scottish National party’s leader in Westminster, Ian Blackford, met May on Wednesday night, and the Liberal Democrat leader, Vince Cable, also accepted her invitation. Blackford later wrote to May, urging her to make a “gesture of faith” to show that she was serious. He said the SNP would take part in cross-party talks if she was able to confirm “that the extension of article 50, a ruling out of a no-deal Brexit and the option of a second EU referendum would form the basis of those discussions”.

Jeremy Corbyn has said he will not hold talks with Theresa May until the prime minister agrees to remove the threat of a no-deal Brexit, ruling out any meeting with the prime minister in the immediate aftermath of the no-confidence vote. Responding to May’s offer of swift talks to break the Brexit impasse, the Labour leader told MPs that before he would entertain “positive discussions about the way forward” she had to agree to his precondition. “The government must remove clearly once and for all the catastrophe of a no-deal exit from the European Union and all the chaos that would result from that,” Corbyn said minutes after the opposition party was defeated in the confidence vote.

Minutes after the exchanges in the Commons, with Downing Street refusing to take no deal off the table, Corbyn’s spokesman said that as things stood, the Labour leader would not take up May’s offer of an evening Brexit meeting. The two sides were still in discussions, but in light of such a fundamental difference, appeared unlikely to come to an agreement to speak in the immediate future – even though only 10 weeks remain until the UK’s planned departure date. When asked directly if Corbyn was going to No10, the spokesman added: “As I understand it that is not going to take place.”

Labour is willing to support a Brexit deal if May will accept a customs union, a close relationship with the single market and enhanced protections for workers and consumers rights. However, this would represent a massive shift for the prime minister and risk splits in her own party, making it hard to see how a deal could be agreed. Corbyn’s spokesman acknowledged this, saying, “Any change in the government red lines will cause them internal splits.”

Investors expect a delay to Britain’s exit from the EU following the crushing defeat of the prime minister’s Brexit deal, the Bank of England governor has said. Mark Carney said the reaction of financial markets in the wake of the vote showed a degree of confidence that a no-deal Brexit was unlikely on 29 March. The pound bounced back against the dollar on Tuesday night amid optimism that article 50 would be prolonged and that the prospect of a disorderly severance from Brussels had receded. “Public market commentary, consistent with our market intelligence, is that a rebound appears to reflect some expectation that the process of resolution would be extended and that the prospect of no-deal may have been diminished,” said Carney.

Speaking to MPs on the Treasury select committee on Wednesday, the governor said investors were following developments in parliament closely to detect shifts in the direction of Brexit. The reaction of EU officials and governments across the continent was also being watched closely. Carney said a “sharp rebound in sterling following the vote” was the main indicator that some investors believed Brexit could be delayed beyond the end of March.

More than 170 business leaders, including Terence Conran and Norman Foster, have thrown their weight behind the campaign for a second referendum on Brexit. In a step designed to indicate growing support for a “people’s vote” after Theresa May suffered the heaviest parliamentary defeat in the modern era over her Brexit plan, the letter due to be published in the Times on Thursday asks both main party leaders in Westminster to support a second referendum. Conran, the renowned designer, who was knighted in 1983, and Lord Foster, the architect behind the Gherkin skyscraper in the City of London, were among 172 signatories from the world of business urging a second referendum on the final Brexit deal.

The architect Sir David Chipperfield and the noble laureate and research scientist Paul Nurse were also among new names on the list of supporters. Several other captains of industry, including Mike Rake, the former chairman of BT, had previously backed the campaign and were also included as signatories. The figures from business, together representing more than £100bn in annual contributions to the UK economy, warned that a bad Brexit deal or Britain leaving without any deal at all could damage the economy. While admitting that many business leaders had initially backed May’s deal, even though they believed it was far from perfect, the group stated that the priority after the prime minister’s defeat in parliament was to stop a “chaotic crash-out from the EU”.

The letter said: “The only viable way to do this is by asking the people whether they still want to leave the EU. With the clock now ticking rapidly before we are due to quit, politicians must not waste any more time on fantasies. We urge the leadership of both the main parties to support a people’s vote.” Both May and the Labour frontbench under Jeremy Corbyn have so far dismissed the idea of a second referendum. The prime minister has said she will speak to senior MPs to find a compromise deal, while Corbyn is pushing for a general election.

German carmakers on Wednesday warned of fatal consequences if Britain left the European Union without a divorce deal, predicting job losses in Britain and Europe and urging lawmakers to redouble efforts to ensure tariff-free trade can continue. Prime Minister Theresa May’s deal to leave the EU suffered an overwhelming defeat in parliament on Tuesday, leaving the country’s future in limbo and manufacturers bracing for their “worst-case scenario”, a no-deal Brexit. Britain would suffer most if it lost free trade with European markets since 80 percent of vehicles assembled in the country are exported, mostly to the European Union. But for Germany the stakes are also high.

In 2016, Britain was the largest single export market for German manufacturers, who sold 800,000 new cars there, or 20 percent of their overall global exports. Fewer cars are exported to China and U.S. because German carmakers have factories there. “The consequences of a ‘no deal’ would be fatal,” German auto industry association VDA said after the vote. “Without an orderly and practical solution for business, jobs in the car industry, particularly on the British side, are on the line.”

U.S. President Donald Trump is likely to move ahead with tariffs on imported vehicles, a move that could prompt the European Union to agree a new trade deal, said Senate Finance Committee Chairman Charles Grassley on Wednesday. “I think the president’s inclined to do it,” the Republican senator told reporters. “I think Europe (is) very very concerned about those tariffs … It may be the instrument that gets Europe to negotiate.” U.S. Commerce Department recommendations into whether Trump should impose tariffs of up to 25% on imported cars and parts on national security grounds are due by mid-February. Grassley, who has had regular talks with Trump and U.S. Trade Representative Robert Lighthizer on trade issues, said he did not like new tariffs but “they are a fact of life when Trump is in the White House.”

He said they may have been an “effective tool” in getting China, Canada, Mexico and others to negotiate on trade. Iowa senator Grassley also wants the EU to agree to include agricultural issues in trade talks, although EU trade commissioner Cecilia Malmström said last week the 28-country bloc could not negotiate on agriculture. The White House has pledged not to move forward with imposing tariffs on the EU or Japan as long as it is making constructive progress in bilateral trade talks. Trump has urged the EU to drop its 10% tariff on imported vehicles. The U.S. passenger car tariff is 2.5%, while it imposes 25% tariffs on pickup trucks. Trump has repeatedly threatened to impose new auto tariffs. “Cars is the big one,” Trump said last year.

Beijing is working hard to stop a slowing Chinese economy from hitting its workforce. In the last several weeks authorities have made a flurry of announcements, including tax cuts, monetary policy loosening and plans to support public spending. The push comes as economic data points to sagging domestic growth and the U.S. looks set to keep up the pressure on trade. Amid that environment, worries of widespread job losses won’t help the already gloomy sentiment that’s giving consumers a second thought on spending. The overarching worry for China’s leaders is that unemployment could lead to social unrest, and deeper questioning of the Communist Party’s claim to having a handle on the best interests of the country.

Already, the economy is widely expected to slow from around 6.5% growth to just above 6%. “We think the biggest risk in the near term is rising unemployment around the Lunar New Year,” Haibin Zhu, chief China economist and head of China equity strategy, J.P. Morgan, said in a Monday report. [..] Gavekal Dragonomics’ China Consumer Analyst Ernan Cui pointed out in a Jan. 9 report that an official survey covering 374,000 large industrial firms shows total employment declined by about 2.8 million people in the 12 months through November. [..] [A UBS] survey in November found that 23% of 125 Chinese respondents in manufacturing have already laid off employees due to the negative effect of U.S.-China trade tensions. Some 34% planned to lay off employees in the next six months, and 18% had cut wages, the report said.

Job losses in Chinese manufacturing accelerated in mid-2018 after the U.S. imposed tariffs Note: Employment in large industrial enterprises, three-month moving average. December excluded for data anomalies.

Following what Bloomberg calculated was a record net reverse repo liquidity injection on Wednesday, when the PBOC injected a whopping 560 billion yuan of liquidity into the financial system via open market operations, the Chinese central bank has done it again and in Thursday’s open market operation, it sold 250BN yuan in 7 Day repos (slightly below yesterday’s record 350BN), and 150BN in 28 Day repos, which net of maturities resulted in a whopping net 380BN yuan ($56.2BN) liquidity injection. This brings the net liquidity injection this week to a near record 1.14 Trillion yuan (Monday 20BN, Tuesday 180BN, Wednesday 560BN and Thursday 380BN) and the week is not even over yet – should tomorrow’s reverse repo be of similar magnitude, then this week will go down in history as China’s biggest liquidity injection on record.

As yesterday, today’s massive liquidity injection was aimed at “keeping reasonable and sufficient liquidity in banking system as liquidity falls relatively fast during peak season for tax payments,” according to a statement from the PBOC, although why this year should be such a significant outlier, even when factoring in the liquidity needs ahead of the Lunar new year, to prior periods was not exactly clear. There is, of course, a much simpler explanation: with Chinese economic and trade data turning from bad to worse with every passing day, Beijing’s response is increasingly one of a panicked “spasm”, as Nomura’s Charlie McElligott wrote today when he noted that with regard to the response of Chinese authorities in addressing their economic slowdown and credit crunch, “it had to get worse before it got better”—recently collapsing Chinese data has now clearly forced an escalation of easing-/stimulus-/liquidity- policies.

He ‘won’ by one vote. And now has to win another vote on the name deal itself. Funny to see western media all say Macedonia is set to change its name. Who likes homework, after all? There is no country named Macedonia, that’s the whole point.

The Greek prime minister, Alexis Tsipras, has won a confidence vote in parliament, clearing a major hurdle for Greece’s approval of an accord to end a dispute over Macedonia’s name and averting the prospect of a snap election. Tsipras called the confidence motion after his rightwing coalition partner Panos Kammenos quit the government on Sunday in protest at the name deal signed between Athens and Skopje last year. Parliament gave Tsipras 151 votes, meeting the threshold he required in the 300-member assembly. His leftist party, Syriza, has 145 seats in parliament. Additional support was given by defectors of Kammenos’s Independent Greeks party (ANEL) and independents.

Tsipras told parliament: “I call upon you with hand on heart to give a vote of confidence to the government which gave battle, which bled, but managed to haul the country out of memorandums and surveillance,” referring to Greece’s international lenders, who kept the country on a tight leash for years. [..] Greek opponents of the agreement say Macedonia’s new name – the Republic of North Macedonia, reached after decades of dispute between Athens and Skopje – represents an attempt to appropriate Greek identity.

When the annals of mistakes and abuses in the FBI’s Russia investigation are finally written, Bruce Ohr almost certainly will be the No. 1 witness, according to my sources. The then-No. 4 Department of Justice (DOJ) official briefed both senior FBI and DOJ officials in summer 2016 about Christopher Steele’s Russia dossier, explicitly cautioning that the British intelligence operative’s work was opposition research connected to Hillary Clinton’s campaign and might be biased. Ohr’s briefings, in July and August 2016, included the deputy director of the FBI, a top lawyer for then-Attorney General Loretta Lynch and a Justice official who later would become the top deputy to special counsel Robert Mueller.

At the time, Ohr was the associate attorney general. Yet his warnings about political bias were pointedly omitted weeks later from the Foreign Intelligence Surveillance Act (FISA) warrant that the FBI obtained from a federal court, granting it permission to spy on whether the Trump campaign was colluding with Russia to hijack the 2016 presidential election. Ohr’s activities, chronicled in handwritten notes and congressional testimony I gleaned from sources, provide the most damning evidence to date that FBI and DOJ officials may have misled federal judges in October 2016 in their zeal to obtain the warrant targeting Trump adviser Carter Page just weeks before Election Day.

They also contradict a key argument that House Democrats have made in their formal intelligence conclusions about the Russia case. Since it was disclosed last year that Steele’s dossier formed a central piece of evidence supporting the FISA warrant, Justice and FBI officials have been vague about exactly when they learned that Steele’s work was paid for by the law firm representing the Clinton campaign and the Democratic National Committee (DNC). A redacted version of the FISA application released last year shows the FBI did not mention any connection to the DNC or Clinton.

The Donald has been on a red hot twitter rampage, and he’s completely justified. Actually, we didn’t think the Russian Collusion Hoax could get any stupider until we saw the New York Times’ Friday evening bushwhack. The trio of authors, apparently self-tortured victims of the Trump Derangement Syndrome, actually had the gall to print a story in the once and former Gray Lady of journalistic rectitude which was nothing more than an ugly smear on the sitting President of the United States—one that would have done Joe McCarthy proud. [..] the trio —one of whom graduated from Harvard in 2015 and the other two not much older—don’t seem to even know that foreign policy is a debatable issue.

Or that the American people actually voted into office a candidate who took the other side of Imperial Washington’s unwarranted demonization of Putin and made no bones about his desire for a rapprochement with Russia. Actually, as to pursuing rapprochement, so did: • JFK, after the near catastrophe of the Cuban Missile Crisis; • Lyndon Johnson, after the Seven Days War during his meeting with Kosygin at Glassboro NJ; • Richard Nixon, with the ABM Treaty, detente and his visit with Brezhnev in Moscow; • Jimmy Carter, when he signed the SALT-II agreement; • Ronald Reagan, when he went to Moscow to virtually end the Cold War; and • Bill Clinton, when he sent a multi-billion IMF aid package to Yeltsin to help him get re-elected in 1996.

The fact is, all of the above presidential policy initiatives were heatedly debated in Washington during a period when the US and Soviet Union each had roughly 9,000 nuclear warheads pointed at the other. But that did not lead to FBI counter-intelligence investigations of politicians—to say nothing of sitting Presidents—who took the “wrong” side of these thoroughly democratic debates.

Taking the art of fake news to new heights, a non-profit has circulated mock Washington Post issues near the White House, telling readers that President Donald Trump fled to Crimea on the back of women-led protests. Activists giving out fake copies of the Washington Post commuters were spotted near the White House on Wednesday morning. Vigilant readers immediately alerted the newspaper, which said that the copies, dated May 1, 2019, were “not Post products” and that it was “looking into this.” The fake copies include an eye-catching headline for the lead story: “UNPRESIDENTED. Ending Crisis, Trump Hastily Departs White House,” complete with a picture of a glum Trump on his way to “slip in a private car in the wee hours of the morning.”

The paper “reports” that Trump abruptly left his office at 3:15am on May 1, leaving a message on a napkin in the Oval Office that blamed “crooked Hillary,” the mysterious “Hfior,” and “the Fake News Media” for his flight. The report, meticulously mimicking the Washington Post’s source-based reporting style, cites “four White House aides” speaking on condition of anonymity, that they found the napkin two days before events took a dramatic turn. Trump’s fictional resignation and the subsequent swearing-in of Vice President Mike Pence, who instantly promises to keep as low a profile as possible, comes amidst “massive protests” staged by a grassroots movement with #MeToo as its backbone.

[..] The news of Trump’s resignation sparks a wave of celebrations across the globe, with European countries refusing to shelter him. The creators of the fake diligently stick to the Washington Post’s style, fanning the Russia collusion narrative just like their prototype by sending Trump to seek safe haven in Russia – namely, Crimea. While there has been speculation that radical liberal political activist group MoveOn or CODEPINK, a women-led grassroots NGO, might be behind the stunt since they promoted the action, later in the day, The Yes Men, a progressive non-profit group, claimed responsibility in a press release.

UK MPs want action. I say don’t depend on politicians if you want to get things done. Britain has a target date of 2042 for phasing out avoidable plastic waste. As its volume is set to treble by 2030. That is so insane, forget about the rest too. Politics won’t solve this.

A new global agreement to protect the seas should be a priority for the government to stop our seas becoming a “sewer”, according to a cross-party group of MPs. Plastic pollution is set to treble in the next decade, the environmental audit committee warned, while overfishing is denuding vital marine habitats of fish, and climate change is causing harmful warming of the oceans as well as deoxygenation and acidification. The effects of plastic pollution are particularly poorly understood, the committee found in its report, published on Thursday. It found “a lack of data on the serious long-term harm and health implications of plastic particles entering the food chain” and accused the government of treating the oceans as “out of sight, out of mind”.

One way of tackling the problem would be through a “Paris agreement for the sea”, the MPs recommended. Governments are still working on a possible new ocean protection treaty, under the UN. The MPs also called for the government to bring forward the target date of phasing out avoidable plastic waste from 2042, and urged greater action to reduce greenhouse gas emissions. Labour MP Mary Creagh, chair of the committee, said: “We have to stop treating our seas as a sewer. Plastic, chemicals and sewage are choking our oceans, polluting our water and harming every ocean species from plankton to polar bears. Supporting Indonesia and Malaysia to reduce plastic while simultaneously exporting our contaminated plastics to them shows the lack of a joined-up approach at the heart of the government’s strategy.”

[..] A UK government spokesperson said: “The UK is already a global leader in protecting our seas and oceans. We have recently proposed 41 new marine conservation zones, led calls to protect 30% of the world’s oceans by 2030, and we are going further and faster to tackle the plastic that harms marine life with our ambitious resources and waste strategy. “We know there is more to do, and we will soon publish an international ocean strategy to drive global action to conserve the world’s oceans.”

“The economy is in great shape,” Fed Chairman Jerome Powell said today at the press conference after the FOMC meeting. Inflation as measured by the Fed’s preferred low-ball measure “core PCE” has hit the Fed’s target of 2%, and the Fed expects it to hit 2.1% by year-end. Inflation as measured by CPI jumped to 2.8%. “Job gains have been strong,” today’s statement said. The “unemployment rate has declined,” while “growth of household spending has picked up,” and “business fixed investment has continued to grow strongly.” This is no longer the crisis economy of yore. But the interest rates are still low and stimulative, befitting for a crisis economy. So something needs to be done, and it’s getting done, if “gradually.”

There were all kinds of intriguing elements in the FOMC’s increasingly hawkish but “gradual” hoopla today. By unanimous vote, the FOMC raised its target for the federal funds rate by a quarter percentage point to a range between 1.75% and 2.0%. This was expected; what’s intriguing is the unanimous vote, unlike prior rate hikes. Four rate hikes in 2018 (two more this year) are now gradually being baked in, according to the median expectation of the 15 members of the FOMC, per the infamous “dot plot” with which the Fed tries to communicate potential rate moves: One member expects 5 rate hikes in 2018; seven members expect 4 hikes; five members expect 3 hikes, and two members expect no more hikes.

At the March meeting, four rate hikes had appeared in the dot plot as a real but more distant possibility. Two more hikes this year would bring the top end of the target range to 2.5% by year-end. This shows the 2018 section of the dot plot:

Rates are expected to continue to rise, three times in 2019 and once in 2020, nudging the federal funds rate to nearly 3.5%. A presser after every meeting – oh boy. During the press conference, Powell said that, starting next January, there will be a press conference after every FOMC meeting. This idea has been mentioned a couple of times recently to prepare markets for it. Now it’s official. As in every Fed announcement, it’s no biggie, really, trust us. The move is designed to “explain our actions and answer your questions,” Powell said. It was “only about improving communications.” It didn’t mean at all that the Fed would be speeding up its rate hikes, he said.

[..] Interest paid to the banks on excess reserves gets a makeover. Banks have about $1.89 trillion in “excess reserves” on deposit at the Fed. The Fed has been paying banks interest on these excess reserves at a rate that was equal to the top of the Fed’s target range – so 1.75% since the last rate hike, which amounts to an annual rate of $33 billion of easy profits for the banks. In theory with today’s rate hike, the FOMC would also have increased the rate it pays on excess reserves to 2.0%.

The ECB will debate on Thursday whether to end its huge asset purchases by year-end, in what would be its biggest step towards dismantling crisis-era stimulus credited with pulling the euro zone economy out of recession. Financial investors are coming to terms with the end of a decade of easy money from the world’s top central banks, with the Federal Reserve on Wednesday raising interest rates for a seventh time in 3-1/2 years in a further shift from policies used to battle the 2007-2009 financial crisis and recession. Meeting as growth is slowing and political populism threatens to set off market turbulence, the ECB is expected to argue that its 2.55 trillion euro bond-buying scheme has done its job in bringing the 19-member currency bloc back from the brink of collapse.

Whether policymakers take the actual decision at their meeting in Riga on Thursday or hold off until July appears secondary as they have long argued that the scheme, commonly known as quantitative easing (QE), should be concluded and the policy focus shift to the expected path of interest rates. The biggest complication could be the increasingly murky economic outlook, weighed down by a developing trade war with the United States, a populist challenge from Italy’s new government and softening export demand. But these factors could actually hasten the ECB’s decision rather than hold it back as the bank has little policy firepower left and a further weakening of the outlook could make a later exit more difficult.

“We believe the ECB may be in a hurry to close the QE chapter,” Bank of America Merrill Lynch said in a note to clients. “We think this is essentially political, as the ECB would not want its monetary policy to be affected by claims of supporting or conversely impairing the new policy course in Italy.”

Rising real interest rates haven’t yet made for a sustained pickup in Treasury volatility, leaving some investors to ask what it would take to spark some turbulence. Danielle DiMartino Booth of Quill Intelligence said the European Central Bank, and not the Federal Reserve, holds the key as it looks to set a timetable for winding down its ultra-accommodative policies. With the Federal Reserve’s shrinking balance sheet unable to offset easy global financial conditions on its own, investors should closely watch the ECB at Thursday’s meeting where the central bank is expected to discuss the end of quantitative easing, though the actual wind-down almost certainly remains several months away at the earliest. “The culmination of ECB QE will remove a bond-volatility governor,” said Booth, in a note published on Tuesday.

China’s economy is finally starting to cool under the weight of a multi-year crackdown on riskier lending that is pushing up borrowing costs for companies and consumers, with data on Thursday pointing to a broad slowdown in activity in May. China’s central bank sparked concerns over the health of the economy earlier in the day when it left short-term interest rates unchanged, surprising markets which had expected it to follow a hike by the Federal Reserve, as it has tended to do. Industrial output, investment and retail sales all grew less than expected, suggesting further weakness ahead if Beijing perseveres with its crackdowns on pollution, questionable local government spending and off-balance sheet “shadow” financing.

The data, which showed the slowest investment growth in over 22 years, “was all shockingly weak by Chinese standards,” economists at Rabobank said, adding that the readings may explain the central bank’s decision to keep rates on hold. “Get ready for headlines talking about Chinese deleveraging hitting the economy – except it isn’t even deleveraging yet! China is walking more of a tightrope than markets believe – and the data underline that issue clearly,” they said. China has been walking a fine line between rolling out measures to curb financial risks and pollution and tapping the brakes so hard that business activity slows sharply.

Much of their effort so far has focused on the banking sector rather than corporate debt reduction or deleveraging – possibly explaining why China’s headline growth has been so surprisingly solid. GDP has expanded at a steady 6.8 percent for three straight quarters. But official and unofficial gauges are now showing the regulatory crackdown is starting to filter through to the broader economy, with companies complaining it is harder to get financing and a growing number of firms defaulting on bonds.

High-grade corporate bonds are “gradually” – the key word in everything the Fed says – and reluctantly coming to grips with the new era: Yields are rising and bond prices are falling. The Fed has been laboring to accomplish that. With high-grade debt, the Fed’s plan is working “gradually.” But investors in the riskiest corporate junk debt are totally blowing off the Fed. They’re floating around in their own dream world, facing a very rude awakening. In terms of high-grade corporate bonds, the sell-off has been significant, even if it’s just the beginning. The S&P index for AA-rated bonds is down 2.7% so far this year. As prices have declined, yields have surged, with the average AA yield now at 3.51%, up from around 2.2% in mid to late-2016 (data via ICE BofAML US AA Effective Yield Index):

These are the types of bonds that Apple and other large companies hold in their “cash or cash equivalent” accounts that are registered overseas, and that are now being “repatriated” and sold, and the proceeds from the sales are now being plowed into mega-share buyback programs. These corporations, once avid buyers of this high-grade corporate debt, have turned into sellers.

[..] at the riskiest end of the corporate bond spectrum, with bonds rated CCC or below (deep junk), the party that started at the end of the oil bust in February 2016 simply continued. The S&P bond index for CCC-rated bonds has risen 4.5% so far this year (compared to a 2.7% decline for AA-rated index). Since February 2016, when Wall Street decided to plow new money into junk-rated energy companies, the CCC-rated index has skyrocketed 82%. The average yield of bonds rated CCC or lower is now at 9.56%, down from 12.5% in December 2016, when the Fed got serious, and down from 22% during the peak of the oil bust. This is the lowest yield since the bygone era of “QE Infinity” in June 2014:

The bloodbath in the digital currency market showed no sign of abating, with all major coins trading in the red Wednesday. In the past 24-hours, a further $25 billion has been wiped off the total value of all cryptocurrencies, led by bitcoin, the world’s biggest digital currency, which reached its lowest level since Feb. 5. A single bitcoin traded to an intraday low of $6,133.31 and has since bounced to $6,280.18, down 3.8%, since Tuesday 5 p.m. Eastern Time on the Kraken Exchange. The total value of all cryptocurrencies dipped below $270 billion in late afternoon New York trading, the lowest level since April 11, according to data from CoinMarketCap. The move lower came after a research report found data that it said suggested the price of bitcoin may have been manipulated in late 2017.

In the University of Texas paper, researchers said they uncovered data that they believe shows Tether, a stable coin that is pegged to the U.S. dollar, was used to artificially push up the price of bitcoin during its late 2017 rally towards $20,000. “Less than 1% of hours with such heavy Tether transactions are associated with 50% of the meteoric rise in bitcoin and 64% of other top cryptocurrencies,” wrote John M. Griffin, a finance professor and Amin Shams, a graduate student. Questions have surrounded Tether and crypto exchange Bitfinex, which were both subpoenaed by the Commodity Futures Trading Commission in 2017 seeking data on Tether and its backing of U.S. dollars. Today’s findings will bring the 11th most traded cryptocurrency back into the spotlight.

“Overall, we find that Tether has a significant impact on the cryptocurrency market. Tether seems to be used both to stabilize and manipulate bitcoin prices,” they said.

[..] away from parliament, and far from the tabloid front pages, a serious breach is opening up in British politics. Last week some of the most senior business leaders in Britain came out of a Brexit meeting at No 10, and promptly tore the prime minister to shreds. “We’re playing economics; [the politicians] are playing politics,” said Paul Drechsler, president of the bosses’ organisation, the Confederation of British Industry. “In the world of business, we’re frustrated. We’re angry.” An extraordinary statement, especially from an executive invited to tea and biscuits with May. If supposedly tame industrialists now talk like this, you have to wonder what sounds come out of the feral lot.

Yet the CBI’s impatience is shared by many. Once the long-haul arm of the Tory movement, the Freight Transport Association lashed out at May last week for “playing chicken with crucial parts of the British economy and the livelihoods of … 7 million Britons”. These are close friends of the Conservative party.As one senior representative of a leading business organisation says: “Over the past two years, most company bosses would never risk saying openly that Brexit is turning out to be a disaster, in case it scared off their best staff.” With fewer than 290 days before Britain formally leaves the EU, their caution is running out.

This is a far bigger story than the one on the front pages about who promised which amendment to which band of Tories. One of the fundamental relationships in the establishment is fracturing – and the consequences for government and economy could prove to be historic.

On Tuesday, as Donald Trump and Kim Jong-un shook hands for their much-anticipated summit in Singapore, one Korean reporter observed a curious episode. Koreans watching the scene unfold on a TV screen at a railway station in Seoul began applauding. Meanwhile, some nearby Western tourists, perturbed by this development, scratched their heads in confusion. “I am actually baffled to see them clapping here,” said one British tourist. There’s perhaps no better symbol of the gulf in worldwide reactions to the summit than this episode. While South Koreans cautiously celebrated a historic step in the thawing of hostilities that have hung over them for almost seventy years, the Western media seemed to look on with alarm — even anger.

Hostility to the summit, much of it from Democrats and liberals, had been a staple of press coverage in the months leading up to it, often from commentators who just a few months earlier had been panicking about exactly the opposite outcome. But it reached a fever pitch over the last few days. There was, for example, the collective hyperventilation over a symbolic arrangement of North Korean and US flags. There was MSNBC’s Nicole Wallace, who warned that the whole summit was actually a “Trumpian head fake,” a mere artifact of Trump’s “midterm strategy” and his “get out of sitting with Bob Mueller strategy.” Sue Mi Terry of the defense contractor–funded Center for Strategic and International Studies cautioned that “a peace treaty is not okay” and should “come at the end of the process” because it “undermines the justification of our troops staying in South Korea.”

Italy has postponed high-level discussions with France on Wednesday after French President Emmanuel Macron criticized Rome for refusing to take in a migrant rescue ship full of 629 shipwrecked North Africans – forcing it to divert to Valencia, Spain. After the ship ran out of supplies, the Italian Navy agreed to escort them across the Mediterranean. “Italy’s new Economy Minister Giovanni Tria said he was cancelling a meeting with his French counterpart Bruno le Maire in Paris. The French economy ministry later said the ministers had “agreed that Mr Tria will come to Paris in the coming days”. -AFP

Italy’s decision to refuse the migrants came after their new Interior Minister, Matteo Salvini, said in early June that “the good times for illegals are over” – writing an urgent letter ordering Malta to accept the 629 migrants picked up by the non-governmental organization (NGO) ship MV Aquarius, run by the group SOS Mediterranee. Salvini called Malta the “safest port” for the passengers, advising that Rome would not offer refuge. After Malta refused leading to several days in limbo, Spain agreed to take the passengers. In response to the ordeal, French President Emmanuel Macron accused Italy of “cynicism and irresponsibility,” adding that their EU neighbor is “playing politics” with the refugees.

Meanwhile Gabriel Attal, the spokesman for Macron’s party, called Italy’s actions “nauseating”. Italian Interior Minister Matteo Salvini responded – saying on Tuesday that he would not “accept hypocritical lessons from countries that have preferred to look the other way on immigration,” and adding on Wednesay that unless France issues an “official apology” for Macron’s inflammatory comments, a Friday meeting between Italian Prime Minister Guiseppe Conte and Macron should be canceled.

Apple said Wednesday it was strengthening encryption on its iPhones to thwart police efforts to unlock handsets without legitimate authorization. The move by Apple, the latest in an ongoing clash with law enforcement, comes amid reports of growing use of a tool known as GrayKey which can enable police to bypass iPhone security features. Apple said the new features are not designed to frustrate law enforcement but prevent any bypassing of encryption by good or bad actors. “At Apple, we put the customer at the center of everything we design,” the company said in a statement.

“We’re constantly strengthening the security protections in every Apple product to help customers defend against hackers, identity thieves and intrusions into their personal data. We have the greatest respect for law enforcement, and we don’t design our security improvements to frustrate their efforts to do their jobs. Apple said it was working a fix to mitigate the possibility of accessing data from GrayKey or similar tools. Apple said that it has a team that responds to law enforcement and national security requests 24 hours a day. But the company has been a target of some in law enforcement for rejecting efforts to allow easy access to iPhones.

Two years ago, Apple went to court to block an FBI effort to force it to weaken iPhone encryption on the device of a mass shooter in San Bernardino, California, but officials dropped the case after finding a tool to unlock the phone.

Governments in Skopje and Athens have faced a furious backlash as the challenge of solving one of the world’s most bitter diplomatic feuds hit home just a day after Macedonia announced it was willing to change its name. Hours after the two neighbours declaring they had reached a landmark accord that would see the tiny Balkan state rename itself the Republic of North Macedonia, the nation’s president refused point-blank to sign the deal. “My position is final and I will not yield to any pressure, blackmail or threats,” president Gjorge Ivanov, who is backed by the nationalist opposition, told a news conference in Skopje. The agreement had conceded far too much to Greece – even if its ultimate aim was the country’s future membership of Nato and the EU, he said.

The backlash came despite officials in Brussels, London and Washington reacting with unbridled enthusiasm to the breakthrough. Nato secretary general, Jens Stoltenberg welcomed the accord, saying: “This is really an historical agreement by [politicians] who have shown courage and great political leadership.” Greece has long argued that the state’s name – adopted when it broke away from Yugoslavia in 1991 – conveys thinly disguised irredentist claims on its own northern province of Macedonia. The appropriation of figures associated with ancient Greek history – not least Alexander the Great – had reinforced fears in a region prone to shifting borders.

But opposition to the deal was also pronounced in Greece. As in Skopje – where prime minister Zoran Zaev’s leftist coalition was accused of leading the country to national humiliation – prime minister Alexis Tsipras and his leftist Syriza party was also charged with surrendering cherished national rights. One newspaper ran a front-page graphic showing Tsipras, the Greek foreign minister and president being shot by firing squad for treason.

Ice in the Antarctic is melting at a record-breaking rate and the subsequent sea rises could have catastrophic consequences for cities around the world, according to two new studies. A report led by scientists in the UK and US found the rate of melting from the Antarctic ice sheet has accelerated threefold in the last five years and is now vanishing faster than at any previously recorded time. A separate study warns that unless urgent action is taken in the next decade the melting ice could contribute more than 25cm to a total global sea level rise of more than a metre by 2070. This could lead eventually to the collapse of the entire west Antarctic ice sheet, and around 3.5m of sea-level rise.

Prof Andrew Shepherd, from Leeds University and a lead author of the study on accelerating ice loss, said: “We have long suspected that changes in Earth’s climate will affect the polar ice sheets. Thanks to our satellites our space agencies have launched, we can now track their ice losses and global sea level contribution with confidence.” He said the rate of melting was “surprising.” “This has to be a cause for concern for the governments we trust to protect our coastal cities and communities,” Shepherd added. The study, published in Nature, involved 84 scientists from 44 international organisations and claims to be the most comprehensive account of the Antarctic ice sheet to date.

It shows that before 2012, the Antarctic lost ice at a steady rate of 76bn tonnes per year – a 0.2mm per year contribution to sea-level rise. However since then there has been a sharp increase, resulting in the loss of 219bn tonnes of ice per year – a 0.6mm per year sea-level contribution. The second study, also published in Nature, warns that time is running out to save the Antarctic and its unique ecosystem – with potentially dire consequences for the world. The scientists assessed the probable state of Antarctica in 2070 under two scenarios. The first in which urgent action on greenhouse gas emissions and environmental protection is taken in the next few years, the second if emissions continue to rise unabated and the Antarctic is exploited for its natural resources.

The amount of monetary stimulus increasingly imposed on the financial system creates false signals about the economy’s true growth rate, causing a vast misallocation of capital, impaired productivity and weakened economic activity. To help quantify the amount of stimulus, please consider the graph. Federal Reserve (Fed) monetary stimulus comes in two forms. First in the form of targeting the Fed Funds interest rate at a rate below the nominal rate of economic growth (blue). Second, it stems from the large scale asset purchases QE) by the Fed (orange). When these two metrics are quantified, it yields an estimate of the average amount of monetary stimulus (red) applied during each post-recession period since 1980. It has been almost ten years since the 2008 financial crisis and the Fed is applying the equivalent of 5.25% of interest rate stimulus to the economy, dwarfing that of prior periods.

The graph highlights that the Fed has been increasingly aggressive in both the amount of stimulus employed as well as the amount of time that such monetary stimulus remains outstanding. Amazingly few investors seem to comprehend that despite the massive level of monetary stimulus, economic growth is trending well below recoveries of years past. Additionally, as witnessed by historically high valuations, the rise in the prices of many financial assets is not based on improving economic fundamentals but simply the stimulative effect that QE and low interest rates have on investor confidence and financial leverage. Now consider the ramifications of a Fed that continues to increase the Fed Funds rate and moves forward with plans to slowly remove QE.

First, the calculation of disposable personal income, income less taxes, is largely a guess and very inaccurate due to the variability of income taxes paid by households. Secondly, but most importantly, the measure is heavily skewed by the top 20% of income earners, needless to say, the top 5%. As shown in the chart below, those in the top 20% have seen substantially larger median wage growth versus the bottom 80%.

Lastly, disposable incomes and discretionary incomes are two very different animals. Discretionary income is what is left of disposable incomes after you pay for all of the mandatory spending like rent, food, utilities, health care premiums, insurance, etc. According to a Gallup survey, it requires about $53,000 a year to maintain a family of four in the United States. For 80% of Americans, this is a problem even on a GROSS income basis.

This is why record levels of consumer debt is a problem. There is simply a limit to how much “debt” each household can carry even at historically low interest rates. It is also the primary reason why we can not have a replay of the 1980-90’s. “Beginning 1983, the secular bull market of the 80-90’s began. Driven by falling rates of inflation, interest rates, and the deregulation of the banking industry, the debt-induced ramp up of the 90’s gained traction as consumers levered their way into a higher standard of living.”

“While the Internet boom did cause an increase in productivity, it also had a very deleterious effect on the economy. As shown in the chart above, the rise in personal debt was used to offset the declines in personal income and savings rates. This plunge into indebtedness supported the ‘consumption function’ of the economy. The ‘borrowing and spending like mad’ provided a false sense of economic prosperity. During the boom market of the 1980’s and 90’s consumption, as a%age of the economy, grew from roughly 61% to 68% currently. The increase in consumption was largely built upon a falling interest rate environment, lower borrowing costs, and relaxation of lending standards. (Think mortgage, auto, student and sub-prime loans.) In 1980, household credit market debt stood at $1.3 Trillion. To move consumption, as a% of the economy, from 61% to 67% by the year 2000 it required an increase of $5.6 Trillion in debt. Since 2000, consumption as a% of the economy has risen by just 2% over the last 17 years, however, that increase required more than a $6 Trillion in debt.

Despite all the happy talk about “recovery” and higher growth, wages have gone nowhere since 2000–and for the bottom 20% of workers, they’ve gone nowhere since the 1970s. GDP has risen smartly since 2000, but the share of GDP going to wages and salaries has plummeted: this is simply an extension of a 47-year downtrend. [..] .. our system requires ever-higher household incomes to function–not just in the top 5%, but in the top 80%. Our federal social programs–Social Security, Medicare and Medicaid–are pay-as-you-go: all the expenditures this year are paid by taxes collected this year. As I have detailed many times, the so-called “Trust Funds” are fictions; when Social Security runs a deficit, the difference between receipts and expenses are filled by selling Treasury bonds in the open market–the exact same mechanism ther government uses to fund any other deficit.

The demographics of the nation have changed in the past two generations. The Baby Boom is retiring en masse, expanding the number of beneficiaries of these programs, while the number of full-time workers to retirees is down from 10-to-1 in the good old days to 2-to-1: there are 60 million beneficiaries of Social Security and Medicare and about 120 million full-time workers in the U.S. Meanwhile, medical expenses per person are soaring. Profiteering by healthcare cartels, new and ever-more costly treatments, the rise of chronic lifestyle illnesses–there are many drivers of this trend. There is absolutely no evidence to support the fantasy that this trend will magically reverse.

Costs are skyrocketing and the number of retirees is ballooning, but wages are going nowhere. Do you see the problem? All pay-as-you-go programs are based on the assumption that the number of workers and the wages they earn will both rise at a rate that is above the underlying rate of inflation and equal to the rate of increase in pay-as-you-go programs. If 95% of the households are earning less money when adjusted for inflation, and their wealth has also declined or stagnated, then how can we pay for programs which expand by 6% or more every year? The short answer is you can’t.

Travelers and fuel suppliers across the United States braced for higher prices and shortages ahead of the Labor Day holiday weekend as the country’s biggest fuel pipelines and refineries curb operations after Hurricane Harvey. Just six days after Harvey slammed into the heart of the U.S. energy industry in Texas, the effects are being felt not just in Houston, but also in Chicago and New York, and prices at the pump nationwide have hit a high for the year. Supply shortages have developed even though there are nearly a quarter of a billion barrels of gasoline stockpiled in the United States. But much of it is held in places where it cannot be accessed due to massive floods, or too far away from the places it is needed. Some of it is unfinished, meaning it needs to be blended before it can go to gas stations.

Harvey has highlighted another weakness in the system: pipeline terminals typically only have a five-day supply in storage to load into the lines. Some of the biggest pipelines in the United States, supplying the northeast market and the Chicago area, have already shut down or reduced operations because they have no fuel to pump. “Gasoline is very much a ‘just-in-time’ fuel, for as many million barrels as they think we have,” said Patrick DeHaan, petroleum analyst at GasBuddy. “Sure, they are somewhere, but they still have to be mixed and blended together.” At least two East Coast refiners, including Philadelphia Energy Solutions and Irving Oil, have already run out of gasoline for immediate delivery as they have rushed to send supplies to the U.S. Southeast, Caribbean, Mexico and South America to offset the lack of exports since Harvey.

The scope of Wells Fargo’s fake accounts scandal grew significantly on Thursday, with the bank now saying that 3.5 million accounts were potentially opened without customers’ permission between 2009 and 2016. That’s up from 2.1 million accounts that the bank had cited in September 2016, when it acknowledged that employees under pressure to meet aggressive sales targets had opened accounts that customers might not have even been aware existed. People may have had different kinds of accounts in their names, so the number of customers affected may differ from the account total. Wells Fargo said Thursday that about half a million of the newly discovered accounts were missed during the original review, which covered the years 2011 to 2015.

After Wells Fargo acknowledged the fake accounts last year, evidence quickly appeared that the sales practices problems dated back even further. So Wells Fargo hired an outside consulting firm to analyze 165 million retail bank accounts opened between 2009 and 2016. Wells said the firm found that, along with the 2.1 million accounts originally disclosed, 981,000 more accounts were found in the expanded timeline. And roughly 450,000 accounts were found in the original window. The scandal was the biggest in Wells Fargo’s history. It cost then-CEO John Stumpf his job, and the bank’s once-sterling industry reputation was in tatters. The company ended up paying $185 million to regulators and settled a class-action suit for $142 million. New managers have been trying to amends with customers, politicians and the public.

But it’s been tough, as new revelations keep coming. Wells Fargo said last month that roughly 570,000 customers were signed up for and billed for car insurance that they didn’t need or necessarily know about. Many couldn’t afford the extra costs and fell behind in their payments, and in about 20,000 cases, cars were repossessed. Other customers have filed lawsuits against Wells Fargo saying they were victims of unfair overdraft practices. Wells Fargo is also still under several investigations for its sales practices problems, including a congressional inquiry and one by the Justice Department. Wells Fargo said Thursday that of the 3.5 million accounts potentially opened without permission, 190,000 of those incurred fees and charges. That’s up from 130,000 that the bank originally said. Wells Fargo will refund $2.8 million to customers, in addition to the $3.3 million it already agreed to pay.

Yngve Slyngstad, chief executive officer of Norges Bank Investment Management, as the fund is known, says the heyday of cross-border trade is probably behind us. “The question investors are asking themselves is if the easy wins already have been made,” Slyngstad said in an Aug. 29 interview from his office on the top floor of Norway’s central bank in Oslo. “The global supply chains have in a way had a one-time gain primarily through outsourcing of multinationals to China.” Norway’s wealth fund owns 1.3% of globally listed stocks, spread out over almost 80 countries. And with interest rates at record lows, the investor has cut its long-term return expectations to about 3% from 4%, even after winning approval from parliament to raise its share of equities to 70% from 60%.

Slyngstad, who became CEO in 2008 just as the global economy was sinking into the worst crisis since the Great Depression, noted that back then the fund rode out the turmoil by dumping bonds and buying stocks. “I don’t expect that we will act differently in any similar crisis in the future,” he said. During a recent conference on globalization, the fund’s chief strategist, Bjorn Erik Orskaug, suggested the world might be at an “inflection point” in trade, with shallower value chains and less cross-border production. And then there’s the protectionist agenda some governments are pursuing. “Is there also a political situation that could make it more challenging?” Slyngstad said. “Time will tell, but there’s of course a risk on the horizon.” He says the wealth fund’s extremely long-term investment timeline allows it to look past the noise coming from governments that come and go.

The fund will probably stay over-weighted in Europe, where it’s more of an active investor. But the only two economies that really matter are the U.S. and China, Slyngstad said. [..] As the fund approaches $1 trillion in value, its stated goal is to safeguard today’s oil wealth for future generations of Norwegians. It has surged in size since its inception two decades ago, generating an annual nominal return of 5.89%. Norway’s government last year started taking cash out of the fund for the first time, to make up for lower oil revenue. Withdrawals are set to hit about 72 billion kroner ($9.3 billion) in 2017, and remain at that level in coming years amid stricter fiscal rules.

Minnesota’s debt to its workers’ retirement system has soared by $33.4 billion, or $6,000 for every resident, courtesy of accounting rules. The jump caused the finances of Minnesota’s pensions to erode more than any other state’s last year as accounting standards seek to prevent governments from using overly optimistic assumptions to minimize what they owe public employees decades from now. Because of changes in actuarial math, Minnesota in 2016 reported having just 53% of what it needed to cover promised benefits, down from 80% a year earlier, transforming it from one of the best funded state systems to the seventh worst, according to data compiled by Bloomberg. “It’s a crisis,” said Susan Lenczewski, executive director of the state’s Legislative Commission on Pensions and Retirement.

The latest reckoning won’t force Minnesota to pump more taxpayer money into its pensions, nor does it put retirees’ pension checks in any jeopardy. But it underscores the long-term financial pressure facing governments such as Minnesota, New Jersey and Illinois that have been left with massive shortfalls after years of failing to make adequate contributions to their retirement systems. The Governmental Accounting Standards Board’s rules, ushered in after the last recession, were intended to address concern that state and city pensions were understating the scale of their obligations by counting on steady investment gains even after they run out of cash – and no longer have money to invest. Pensions use the expected rate of return on their investments to calculate in today’s dollars, or discount, the value of pension checks that won’t be paid out for decades.

Six new banks have joined a UBS-led effort to create a digital cash system that would allow financial markets to make payments and settle transactions quickly via blockchain technology. The group aims to launch the system late next year. Barclays, Credit Suisse, Canadian Imperial Bank of Commerce, HSBC, MUFG and State Street have joined the group developing the “utility settlement coin” (USC), a digital cash equivalent of each of the major currencies backed by central banks, UBS said on Thursday. The group is in discussions with central banks and regulators and is aiming for a “limited ’go live’” in the latter part of 2018, UBS’s head of strategic investment and fintech innovation told the Financial Times.

The Swiss bank first launched the concept in September 2015 with London-based blockchain company Clearmatics, and was later joined on the project by BNY Mellon, Deutsche Bank, Santander and brokerage ICAP. The USC would be convertible at parity with a bank deposit in the corresponding currency, making it fully backed by cash assets at a central bank. Spending a USC would be the same as spending the real currency it is paired with. Blockchain works as a tamper-proof shared ledger that can automatically process and settle transactions using computer algorithms, with no need for third-party verification. Because it does not require manual processing, nor authentication through intermediaries, the technology can make payments faster, more reliable and easier to audit.

Russian President Vladimir Putin warned Friday of a “major conflict” looming on the Korean Peninsula, calling for talks to alleviate the crisis after Pyongyang fired a missile over Japan this week. “The problems in the region will only be solved via direct dialogue between all concerned parties, without preconditions,” Putin said. “Threats, pressure and insulting and militant rhetoric are a dead end,” a statement from his office said, adding that heaping additional pressure on North Korea in a bid to curb its nuclear programme was “wrong and futile.” Tensions on the Korean Peninsula are at their highest point in years after a series of missile tests by Pyongyang.

Early on Tuesday, the reclusive state fired an intermediate-range Hwasong-12 over Japan, prompting US President Donald Trump to insist that “all options” were on the table in an implied threat of pre-emptive military action. The UN Security Council denounced North Korea’s latest missile test, unanimously demanding that Pyongyang halt the programme. US heavy bombers and stealth jet fighters took part in a joint live fire drill in South Korea on Thursday, intended as a show of force against the North, Seoul said. Putin said he feared the peninsula was “on the verge of a major conflict” and called for all sides to sign up to a mediation programme drawn up by Moscow and Beijing. He echoed comments by Foreign Minister Sergei Lavrov who in a Wednesday telephone call with US counterpart Rex Tillerson “underscored… the need to refrain from any military steps that could have unpredictable consequences.”

Prime candidate for worst report ever. The Independent tweeetd: “12 Nobel Prize winners just warned Trump is one of the gravest threats to humanity “. But that’s not what the article by the Press Association says. It says two.

Nobel Prize winners consider nuclear war and US President Donald Trump as among the gravest threats to humanity, a survey has found. More than a third (34%) said environmental issues including over-population and climate change posed the greatest risk to mankind, according to the poll by Times Higher Education and Lindau Nobel Laureate Meetings. But amid rising tensions between the US and North Korea, almost a quarter (23%) said nuclear war was the most serious threat. Of the 50 living Nobel Prize winners canvassed, 6% said the ignorance of political leaders was their greatest concern – with two naming Mr Trump as a particular problem. Peter Agre, who won the Nobel Prize for chemistry in 2003, described the US President as “extraordinarily uninformed and bad-natured”. He told Times Higher Education: “Trump could play a villain in a Batman movie – everything he does is wicked or selfish.”

Laureates for chemistry, physics, physiology, medicine and economics took part in the survey, with some highlighting more than one threat. Peace Prize and Literature Prize recipients were not canvassed. Infectious diseases and drug resistance were considered the gravest threats to humankind by 8% of respondents, while 8% cited selfishness and dishonesty and 6% cited terrorism and fundamentalism. Another 6% spoke of the dangers of “ignorance and the distortion of truth”. Despite high-profile figures Elon Musk and Professor Stephen Hawking expressing concern about the dangers associated with artificial intelligence, just two of those surveyed identified it as among the biggest threats facing humans.

John Gill, editor of Times Higher Education, said the survey offers “a unique insight into the issues that keep the world’s greatest scientific minds awake at night”. He said: “There is a consensus that heading off these dangers requires political will and action, the prioritisation of education on a global scale, and above all avoiding the risk of inaction through complacency.”

Greece wants nothing more than to avoid another bailout — which means it needs debt relief. And so far, that’s the sticking point. “There is now light at the end of the tunnel,” Greek Finance Minister Euclid Tsakalotos said hopefully in June. After months of wrangling, the European Union and International Monetary Fund had just agreed to release more rescue funds to the perennially troubled nation, bringing the total from its third bailout alone to €40.2 billion ($47.75 billion). Euro zone finance ministers took very light steps toward debt relief at that time — they said they were willing to keep deferring interest on financial assistance Greece had already received — but those measures fell short of the relief Greek Prime Minister Alexis Tsipras was pressing for.

The current bailout program is set to end in September of next year. Greece has been wracked by perennial financial crises since 2010, and it even appeared at risk of leaving the euro zone altogether in 2015. Tsipras’s objective is to re-gain full market access to international bond markets and to leave institutional help behind, so the subject of long-term debt is one that will continue to dominate discussions as it draws closer to September 2018. In July, Greece dipped into bond markets after a 3-year hiatus, issuing 5-year debt at an average yield of 4.66%. Greece is expected to return to the market again in the next 12 months. But Greece’s debt isn’t manageable in the long-run without being either extended or forgiven, according to the IMF, which is pressing for easier budgetary targets for Greece while simultaneously undertaking reforms.

Its European creditors currently require it to achieve a primary surplus before debt service of 3.5% of gross domestic product. The ECB has also been emphatic that it will not include Greek government bonds in its own debt-buying mechanism, the Public Sector Purchase Program. In a June letter, ECB President Mario Draghi ruled out that possibility, saying the central bank’s staff wasn’t in a position to fully analyze Greece’s public debt. Analysts at Barclays have estimated that the inclusion of Greek debt into ECB’s bond-buying program would entail monthly purchases of around 115 million euros ($136.5 million).

Hurricane Irma continues to strengthen much faster than pretty much any computer model predicted as of yesterday or even this morning. Per the National Hurricane Center’s (NHC) latest update, Irma is currently a Cat-3 storm with sustained winds of 115 mph but is expected to strengthen to a devastating Cat-5 with winds that could top out at 180 mph or more. Longer term computer models still vary widely but suggest that Irma will make landfall in the U.S. either in the Gulf of Mexico or Florida. Meteorological Scientist Michael Ventrice of the Weather Channel is forecasting windspeeds of up to 180 mph, which he described as the “highest windspeed forecasts I’ve ever seen in my 10 yrs of Atlantic hurricane forecasting.”

In a separate tweet, Ventrice had the following troubling comment: “Wow, a number of ECMWF EPS members show a maximum-sustained windspeed of 180+mph for #Irma, rivaling Hurricane #Allen (1980) for record wind”. The Weather Channel meteorologist also calculated the odds for a landfall along the eastern seaboard at 30%. Meanwhile, the Weather Channel has the “most likely” path of Irma passing directly over Antigua, Puerto Rico and Domincan Republic toward the middle of next week.

Austerity is over, proclaimed the IMF this week. And no doubt attributed that to the ‘successful’ period of ‘five years of belt tightening’ a.k.a. ‘gradual fiscal consolidation’ it has, along with its econo-religious ilk, imposed on many of the world’s people. Only, it’s not true of course. Austerity is not over. You can ask many of those same people about that. It’s certainly not true in Greece.

Austerity is over as governments across the rich world increased spending last year and plan to keep their wallets open for the foreseeable future. After five years of belt tightening, the IMF says the era of spending cuts that followed the financial crisis is now at an end. “Advanced economies eased their fiscal stance by one-fifth of 1pc of GDP in 2016, breaking a five-year trend of gradual fiscal consolidation,” said the IMF in its fiscal monitor.

In Greece, the government did not increase spending in 2016. Nor is the country’s era of spending cuts at an end. So did the IMF ‘forget’ about Greece? Or does it not count it as part of the rich world? Greece is a member of the EU, and the EU is absolutely part of the rich world, so that can’t be it. Something Freudian, wishful thinking perhaps?

However this may be, it’s obvious the IMF are not done with Greece yet. And neither are the rest of the Troika. They are still demanding measures that are dead certain to plunge the Greeks much further into their abyss in the future. As my friend Steve Keen put it to me recently: “Dreadful. It will become Europe’s Somalia.”

An excellent example of this is the Greek primary budget surplus. The Troika has been demanding that it reach 3.5% of GDP for the next number of years (the number changes all the time, 3, 5, 10?). Which is the worst thing it could do, at least for the Greek people and the Greek economy. Not for those who seek to buy Greek assets on the cheap.

But sure enough, the Hellenic Statistical Authority (ELSTAT) jubilantly announced on Friday that the 2016 primary surplus was 4.19% (8 times more than the 0.5% expected). This is bad news for Greeks, though they don’t know it. It is also a condition for receiving the next phase of the current bailout. Here’s what that comes down to: in order to save itself from default/bankruptcy, the country is required to destroy its economy.

And that’s not all: the surplus is a requirement to get a next bailout tranche, and debt relief, but as a reward for achieving that surplus, Greece can now expect to get less … debt relief. Because obviously they’re doing great, right?! They managed to squeeze another €7.3 billion out of their poor. So they should always be able to do that in every subsequent year.

The government in Athens sees the surplus as a ‘weapon’ that can be used in the never-ending bailout negotiations, but the Troika will simply move the goalposts again; that’s its MO.

A country in a shape as bad as Greece’s needs stimulus, not a budget surplus; a deficit would be much more helpful. You could perhaps demand that the country goes for a 0% deficit, though even that is far from ideal. But never a surplus. Every penny of the surplus should have been spent to make sure the economy doesn’t get even worse.

Greek news outlet Kathimerini gets it sort of right, though its headline should have read “Greek Primary Surplus Chokes Economy“.

The state’s fiscal performance last year has exceeded even the most ambitious targets, as the primary budget surplus as defined by the Greek bailout program, came to 4.19% of GDP, government spokesman Dimitris Tzanakopoulos announced on Friday. It came to €7.369 billion against a target for €879 million, or just 0.5% of GDP. A little earlier, the president of the Hellenic Statistical Authority (ELSTAT), Thanos Thanopoulos, announced the primary surplus according to Eurostat rules, saying that it came to 3.9% of GDP or €6.937 billion.

The two calculations differ in methodology, but it is the surplus attained according to the bailout rules that matters for assessing the course of the program. This was also the first time since 1995 that Greece achieved a general government surplus – equal to 0.7% of GDP – which includes the cost of paying interest to the country’s creditors. There is a downside to the news, however, as the figures point to overtaxation imposed last year combined with excessive containment of expenditure.

The amount of €6-6.5 billion collected in excess of the budgeted surplus has put a chokehold on the economy, contributing to a great extent to the stagnation recorded on the GDP level in 2016. On the one hand, the impressive result could be a valuable weapon for the government in its negotiations with creditors to argue that it is on the right track to fiscal streamlining and can achieve or even exceed the agreed targets. On the other hand, however, the overperformance of the budget may weaken the argument in favor of lightening the country’s debt load.

Eurogroup head Dijsselbloem sees no shame in admitting this last point :

“That will be a tough discussion with the IMF,” said Dijsselbloem, who is also the Dutch Finance Minister in a caretaker cabinet, “There are some political constraints where we can go and where we can’t go.” The level of Greece’s primary budget surplus is key in determining the kind of debt relief it will need. The more such surplus it has, the less debt relief will be needed.

That’s just plain insane, malicious even. Greek PM Tsipras should never have accepted any such thing, neither the surplus demands nor the fact that they affect debt relief, since both assure a further demise of the economy.

Because: where does the surplus come from? Easy: from Troika-mandated pension cuts and rising tax levels. That means the Greek government is taking money OUT of the economy. And not a little bit, but a full 4% of GDP, over €7 billion. An economy from which so much has already vanished.

The €7.369 billion primary surplus, in a country of somewhere between 10 and 11 million people, means some €700 per capita has been taken out of the economy in 2016. Money that could have been used to spend inside that economy, saving jobs, and keeping people fed and sheltered. For a family of 3.5 people that means €200 per month less to spend on necessities (the only thing most Greeks can spend any money on).

I’ve listed some of the things a number of times before that have happened to Greece since the EU and IMF declared de facto financial war on the country. Here are a few (there are many more where these came from):

25-30% of working age Greeks are unemployed (and that’s just official numbers), well over 1 million people; over 50% of young people are unemployed. Only one in ten unemployed Greeks receive an unemployment benefit (€360 per month), and only for one year. 9 out of 10 get nothing.

Which means 52% of Greek households are forced to live off the pension of an elderly family member. 60% of Greek pensioners receive pensions below €700. 45% of pensioners live below the poverty line with pensions below €665. Pensions have been cut some 12 times already. More cuts are in the pipeline.

40% of -small- businesses have said they expect to close in 2017. Even if it’s just half that, imagine the number of additional jobs that will disappear.

But the Troika demands don’t stop there; they are manifold. On top of the pension cuts and the primary surplus requirement, there are the tax hikes. So the vast majority of Greeks have ever less money to spend, the government takes money out of the economy to achieve a surplus, and on top of that everything gets more expensive because of rising taxes. Did I ever mention businesses must pay their taxes up front for a full year?

The Troika is not “rebalancing Greece’s public finances in a growth-friendly manner”, as Dijsselbloem put it, it is strangling the economy. And then strangling it some more.

There may have been all sorts of things wrong in Greece, including financially. But that is true to some degree for every country. And there’s no doubt there was, and still is, a lot of corruption. But that would seem to mean the EU must help fight that corruption, not suffocate the poor.

Yes, that’s about a 30% decline in GDP since 2007

The ECB effectively closed down the Greek banking system in 2015, in a move that’s likely illegal. It asked for a legal opinion on the move but refuses to publish that opinion. As if Europeans have no right to know what the legal status is of what their central bank does.

The ECB also keeps on refusing to include Greece in its QE program. It buys bonds and securities from Germany, which doesn’t need the stimulus, and not those of Greece, which does have that need. Maybe someone should ask for a legal opinion on that too.

The surplus requirements will be the nail in the coffin that do Greece in. Our economies depend for their GDP numbers on consumer spending, to the tune of 60-70%. Since Greek ‘consumers’ can only spend on basic necessities, that number may be even higher there. And that is the number the country is required to cut even more. Where do you think GDP is headed in that scenario? And unemployment, and the economy at large?

The question must be: don’t the Troika people understand what they’re doing? It’s real basic economics. Or do they have an alternative agenda, one that is diametrically opposed to the “rebalancing Greece’s public finances in a growth-friendly manner” line? It has to be one of the two; those are all the flavors we have.

You can perhaps have an idea that a country can spend money on wrong, wasteful things. But that risk is close to zilch in Greece, where many if not most people already can’t afford the necessities. Necessities and waste are mutually exclusive. A lot more money is wasted in Dijsselbloem’s Holland than in Greece.

In a situation like the one Greece is in, deflation is a certainty, and it’s a deadly kind of deflation. What makes it worse is that this remains hidden because barely a soul knows what deflation is.

Greece’s deflation hides behind rising taxes. Which is why taxes should never be counted towards inflation; it would mean all a government has to do to raise inflation is to raise taxes; a truly dumb idea. Which is nevertheless used everywhere on a daily basis.

In reality, inflation/deflation is money/credit supply multiplied by the velocity of money. And in Greece both are falling rapidly. The primary surplus requirements make it that much worse. It really is the worst thing one could invent for the country.

For the Greek economy, for its businesses, for its people, to survive and at some point perhaps even claw back some of the 30% of GDP it lost since 2007, what is needed is a way to make sure money can flow. Not in wasteful ways, but in ways that allow for people to buy food and clothing and pay for rent and power.

If you want to do that, taking 4% of GDP out of an economy, and 3.5% annually for years to come, is the very worst thing. That can only make things worse. And if the Greek economy deteriorates further, how can the country ever repay the debts it supposedly has? Isn’t that a lesson learned from the 1919 Versailles treaty?

The economists at the IMF and the EU/ECB, and the politicians they serve, either don’t understand basic economics, or they have their eyes on some other prize.

Investors nursing wounds after the worst selloff in three months for equity and debt markets got another stress to ponder after concerns over Hillary Clinton’s health flared anew. The 68-year-old Democratic presidential nominee, whose polling edge over Donald Trump has soothed traders who fear ruptures to U.S. policy and see virtue in political gridlock, is suffering from pneumonia and became overheated and dehydrated during a Sept. 11 commemoration Sunday, forcing her to leave abruptly, her doctor said. Clinton was prescribed antibiotics and advised to modify her schedule so she can rest.

Volatility is already resurfacing in markets that had purred along for two months inured to everything from politics to weakening global growth, with the S&P 500 Index getting jarred Friday out of its tightest trading range ever in a selloff that erased about $500 billion of share value. While investors and analysts were reluctant to speculate on Clinton’s health, they said expectations she will prevail in November have been a factor in the calm and predicted the scrutiny will intensify. “If we found out that there was something catastrophic about her health it obviously would matter, but you have to be very careful about extrapolating shorter-term news,” Jonathan Golub at RBC Capital Markets in New York, said by phone.

“What we do know is we have two candidates around 70 years old and in reality it must be brutal running around the world for two years.” Speculation central banks are losing their taste for extra stimulus on Friday tore through the blanket of tranquility that has enveloped global markets. The S&P 500, global equities and emerging-market assets tumbled at least 2 percent in the biggest drop since Britain voted to secede from the European Union. The yield on the 10-year Treasury note jumped to the highest since June and the dollar almost erased a weekly slide.

Asian shares suffered their sharpest setback since June on Monday as investors were rattled by rising bond yields and talk the Federal Reserve might be serious about lifting U.S. interest rates as early as next week. Reports that the Bank of Japan was considering ways to steepen the Japanese yield curve, along with worries that central banks more generally were running short of fresh stimulus options, also hit sovereign debt and risk appetite globally. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 2.4%, pulling away from a 13-month peak. It was the largest daily drop since the frenzy caused by Britain’s vote in late June to leave the European Union. On a technical basis the index had been overbought in recent sessions, leaving it vulnerable to a pullback.

Shanghai followed with a fall of 2%, while Australian stocks sank 2.2%. The Nikkei 225 lost 1.9% as the safe haven yen firmed and selling in bonds drove yields on 20-year JGBs to the highest since March. Traders were unsure how the BOJ would try to steepen the yield curve if it goes down that path at a policy review later this month, but markets are worried that tapering of its buying in long-dated bonds could be among the options. EMini futures for the S&P 500, traded in Chicago during Asian hours, swung 0.6% lower, though Treasuries were finding safe-haven demand. Some Fed members have been trying to convince markets that the September meeting would be “live” for a hike, even though futures only imply a one-in-four chance of a move.

No less than three Fed officials are expected to speak later in the day, including board member and noted dove Lael Brainard. Any hint of hawkishness would likely further pressure bonds and equities.

Global selloffs in stocks and bonds resumed Monday, while commodities slumped amid concern central banks in the world’s biggest economies are questioning the benefits of loose monetary policy. Shares in Europe and Asia dropped by the most since the aftermath of Brexit, and futures foreshadowed declines in U.S. equities. Portugese debt led losses among euro-area bonds, while yields in Australia and New Zealand climbed to their highest levels of the quarter. Oil sank to about $45 a barrel as nickel tumbled the most in four weeks. The yen strengthened and South Korea’s won tumbled. Financial markets have been jolted out of a period of calm by an uptick in concern over the outlook for central bank policies.

Federal Reserve Bank of Boston President Eric Rosengren spurred bets on an interest-rate hike on Friday, saying the U.S. economy could overheat should policy makers wait too long to tighten. The comments came a day after European Central Bank chief Mario Draghi surprised markets by playing down the prospect of further stimulus. The S&P 500 slumped 2.5% Friday, breaking out of a range that hadn’t seen it move more than 1% in either direction for 43 days. “Central banks are reluctant to add additional stimulus and that’s causing a lot of concern,” Niv Dagan, executive director at Peak Asset Management in Melbourne, told Bloomberg Radio. “We expect additional downside in the near term. You want to wait and see and remain cautious,” he said.

A sharp stock market pullback is imminent, according to David Rosenberg, chief economist and strategist at Gluskin Sheff. On Friday, stocks were hammered by fears the Federal Reserve might hike rates sooner than expected, sending the S&P 500 index and the Dow Jones industrial average into a tailspin. According to Rosenberg, there’s more trouble ahead. “You have a perfect storm here if you get something like a Fed rate hike into the next several months,” Rosenberg said Thursday on CNBC’s “Futures Now. “The problem is that the market is not priced for it. I wouldn’t be surprised that we see some kind of repeat as we had towards the end of last year into January-February, which was something close to a 12% correction.”

Rosenberg, who has been named to the U.S. Institutional Investor All-America All Star Team several times in his career, doesn’t think the shake-up can be avoided. His reasoning doesn’t just include a potential Fed rate hike. He also takes into account a more richly valued stock market, signs of investor complacency and a sluggish U.S. economy. “We entered into the third quarter with momentum and a lot of hope, and now we’re exiting the third quarter,” he said. “And, let’s face it: The last five or six [economic] numbers have been really soft,” he contended. “The problem now, looking at where the market is priced, you’ve got cycle high multiples, you’ve got a lot of hedge funds in the futures options market that have been chasing performance here up to the price highs, and it doesn’t take much in the way of any sort of near-term adverse news to cause the market to correct.”

U.S. stocks have climbed many walls of worry as they marched to fresh all-time highs in 2016. But the market calm that characterized the summer also propelled investor enthusiasm to extremely elevated levels, according to Goldman Sachs Group Inc., which bodes ill for the near-term performance of equities. Goldman’s sentiment indicator, which tracks S&P 500 futures positioning, now stands at 100 – its maximum level. Readings above 90 or below 10 are contrarian indicators that are “significant in predicting future returns,” writes Chief U.S. Equity Strategist David Kostin in a note titled “Where to Invest Now: None of the Above.” This degree of enthusiasm “points to a 2% near-term S&P 500 fall,” he said.

Central banks have done bulk of the heavy lifting to boost growth since the global financial crisis, but economists now were expecting fiscal spending will get some life. Analysts and central bankers alike have talked up the benefits recently of letting the sun shine in on government spending after years of an austerity drumbeat amid an anaemic global recovery from the financial crisis. “Numerous central bankers, including Mario Draghi, have stressed that monetary policy alone cannot get the world out of its current malaise,” noted Andrew Kenningham, senior global economist at Capital Economics, in a note Wednesday.

“The U.S. Treasury Secretary, Jacob Lew, even claimed ahead of the G-20 summit in China last weekend that the U.S. had won the argument in favour of ‘growth rather than austerity’ and that this had prompted a policy shift by many G-20 governments.” That was in part due to the effects of long-running easing efforts by central banks, Kenningham noted. Many sovereigns have seen their bond yields turn negative, while smaller government budget deficits have reduced debt sustainability concerns, he said. “With global growth still lacklustre, monetary policy seemingly ineffective and government bond yields unprecedentedly low, the case for fiscal stimulus has become more compelling,” Kenningham said. “Partly as a result, we now expect advanced economies overall to benefit from a small fiscal boost in the next couple of years.”

Crude prices fell over 1.5% on Monday after U.S. oil drillers added rigs to look for new production as producers adapt to cheaper crude, with speculators cutting positions betting on further price rises. Brent crude futures were trading at $47.29 per barrel at 0200 GMT (10:00 p.m. EDT), down 72 cents, or 1.5%, from their last settlement. U.S. West Texas Intermediate futures were down 80 cents, or 1.74%, at $45.08 a barrel. Traders said the price falls on Monday and Friday were a result of increasing oil drilling activity in the United States, which indicated that producers can operate profitably around current levels.

“Each dollar is being used far more efficiently and, as a result, $50 oil appears much more palatable,” Barclays bank said in a note to clients. U.S. drillers added oil rigs for a tenth week in the past 11, according to a Baker Hughes rig count report on Friday. It was the longest streak without rig cuts since 2011. Speculative oil traders also became less confident of higher oil prices, cutting their net long U.S. crude futures and options positions for a second consecutive week last week, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. Oil’s near 5%price decline since Sept. 8 partly reverses a 10% rally early in the month, which was fueled by speculation that oil exporters could cap production.

“Monte dei Paschi presented a plan in July to sell €28 billion of bad loans at 27% of face value. That has effectively set a new benchmark for the pricing of Italian bad loans..” But UniCredit expects to lose just 10%? Since UniCredit attributes a higher value to its bad loans, a sale of €20 billion of loans would force it to take €2 billion in write-downs…

For UniCredit, the summer of discontent for Italy’s banks looks likely to stretch well into the fall—and possibly beyond. UniCredit, Italy’s largest lender by assets, emerged as one of the weakest big banks in Europe in July’s stress tests, showcasing the failure of its attempts to respond to rock-bottom interest rates and a huge pile of bad loans. Now, as Jean-Pierre Mustier, the bank’s new CEO, readies a big-bang plan to revive UniCredit’s fortunes, he faces a series of unpalatable choices: Aggressive action to cut the bank’s €80 billion ($89.9 billion) in bad loans—the largest of any European bank—would force the Milanese bank to raise billions in fresh capital, while an asset sale could help bolster its capital position but would hurt already thin profit.

Meanwhile, the travails of Italy’s No. 3 lender, Banca Monte dei Paschi di Siena, promise to only complicate Mr. Mustier’s job. On Thursday, Monte dei Paschi said its CEO, Fabrizio Viola, had agreed with the bank’s board to resign, in a surprise move that came as that bank works on a plan to shed €28 billion in bad loans. Troubles at UniCredit, which has a vast business in Germany and Eastern Europe, could threaten not only Italy’s ailing economy but also the continent’s already fragile financial stability. Brexit has upended Europe’s status quo, making the financial system more sensitive to shocks. Investors are watching UniCredit closely, as they expect its fate to affect both Italy and potentially other lenders on the continent.

[..] A major move to unload bad loans, perhaps as much as €20 billion, “will be key for a rerating of the stock,” said Vicenzo Longo at IG Markets. However, Monte dei Paschi presented a plan in July to sell €28 billion of bad loans at 27% of face value. That has effectively set a new benchmark for the pricing of Italian bad loans. Since UniCredit attributes a higher value to its bad loans, a sale of €20 billion of loans would force it to take €2 billion in write-downs…

While the unemployment rate in Australia has been relatively stable, at 5.7% in July, there is a historically high underemployment rate – people who want to work more – of 8.5%. Combined, the measures lead to an underutilisation rate of 14.2%, much higher than during the global financial crisis and a worrying trend for the Reserve Bank of Australia (RBA). That spare capacity in the labor market limits the ability of workers to push for pay rises, and feeds through to muted demand and confidence. If this trend persists, the RBA could be forced to lower rates again after already easing twice this year. Indeed, wages growth is already at record lows while inflation is likely to remain below the central bank’s target band of 2-3% until 2018.

“For that to turn around you need to see a pick-up in domestic demand,” said Gareth Aird, senior economist at Commonwealth Bank. “We have cash rates down to 1.5% and we’re still not seeing a pick-up in wages or inflation. We probably need to see a pick-up in investment in order to see full-time employment materially lift.” For policymakers – unable to do much in the face of slow global demand – the low business investment is a particularly worrying phenomenon, especially as the end of the mining boom and a slowdown in major trading partner China leave corporate managers leery about spending on new projects. Indeed, latest data showed business investment tumbled in the June quarter as miners continued to cut back while spending plans slipped 9%.

A rift between the IMF and the EU on how to address Greece’s debt crisis is damaging for the country, Prime Minister Alexis Tsipras said on Sunday. “I would say that what is creating conditions of delay in regaining trust of markets and investors … is the constant clash and disagreement between the IMF and European institutions,” Tsipras told a news conference in the northern city of Thessaloniki. The IMF has yet to decide whether to participate in a third international bailout Greece signed up to in mid-2015, saying it is not convinced its debt is sustainable. The country’s current debt to GDP ratio exceeds 170% of national output, the highest in the eurozone. Tsipras said disagreements between the EU and the IMF was preventing timely participation of the country in the quantitative easing program of the ECB. “A country which has made such harsh adjustment cannot wait much more… It is entitled to a fair regulation of the debt issue. The Greek problem is a European problem,” Tsipras said.

The crisis surrounding Hanjin Shipping has rocked the industry, but even more shipping lines could find themselves in trouble thanks to the huge amount of overcapacity in the industry, warns the CEO of a logistics company. Hanjin, which had around 3% of market share in shipping, filed for court receivership at the end of August, which has meant that its ships have been denied access to ports and, in some cases, have been seized. One result of Hanjin’s troubles is that shipping rates have spiked. Prices for shipments between Asia and the U.S. have risen 50% through September, according to data from Freightos, an online shipping rate marketplace. However, this is likely to prove temporary, as prices will fluctuate and currently empty container slots are brought into use, the company added.

Not only have shipping rates risen, but companies which were using Hanjin have received charges from some ports, according to Philip Damas, director for supply chain advisors at Drewry. “Some ports have imposed surcharges on exporters and importers who used Hanjin as a carrier and are waiting for their products in the destination port to cover the port costs unpaid by Hanjin. This is also increasing exporters’ costs,” he told CNBC in an email. Hanjin has been a shock to the system, but a glut in the number of ships carrying goods around the world is still an issue, warns Dr. Zvi Schreiber, CEO of Freightos, an online logistics marketplace. “There has been a significant overcapacity, which is why rates have been so low and that’s why Hanjin went bankrupt in the first place, but it’s not clear if that’s enough..”

Teenagers in America are resorting to sex work because they cannot afford food, according to a study that suggests widespread hunger in the world’s wealthiest country. Focus groups in all 10 communities analysed by the Urban Institute, a Washington-based thinktank, described girls “selling their body” or “sex for money” as a strategy to make ends meet. Boys desperate for food were said to go to extremes such as shoplifting and selling drugs. The findings raise questions over the legacy of Bill Clinton’s landmark welfare-reform legislation 20 years ago as well as the spending priorities of Congress and the impact of slow wage growth. Evidence of teenage girls turning to “transactional dating” with older men is likely to cause particular alarm.

“I’ve been doing research in low-income communities for a long time, and I’ve written extensively about the experiences of women in high poverty communities and the risk of sexual exploitation, but this was new,” said Susan Popkin, a senior fellow at the Urban Institute and lead author of the report, Impossible Choices. “Even for me, who has been paying attention to this and has heard women tell their stories for a long time, the extent to which we were hearing about food being related to this vulnerability was new and shocking to me, and the level of desperation that it implies was really shocking to me. It’s a situation I think is just getting worse over time.”

The qualitative study, carried out in partnership with the food banks network Feeding America, created two focus groups – one male, one female – in each of 10 poor communities across the US. The locations included big cities such as Chicago, Los Angeles and Washington and rural North Carolina and eastern Oregon. A total of 193 participants aged 13 to 18 took part and were allowed to remain anonymous. Their testimony paints a picture of teenagers – often overlooked by policymakers focused on children aged zero to five – missing meals, making sacrifices and going hungry, with worrying long-term consequences. Popkin said: “We heard the same story everywhere, a really disturbing picture about hunger and food insecurity affecting the wellbeing of some of the most vulnerable young people.”

“America’s Investment In Its Own Future Is In A Depression”. As epitomized by share buybacks. Which in turn are simply an expression of ‘the thing that shall not be mentioned’: a lack of confidence in growth, and in the economy as a whole. Why invest when there will be no return?

The U.S. economy, by some measures, has recovered from the Great Recession: The unemployment rate is only half what it was at the worst, real gross domestic product is about 10% larger than the previous peak, and personal wealth has risen by more than $20 trillion as the stock market and the housing market have bounced back. But everyone knows the recovery has been uneven. Total employment may have grown by 6 million since the recession began in 2008, but employment in manufacturing is down nearly 1.5 million. Real disposable incomes may be up by 16%, but because most of the increase has been captured by the richest sliver of society, the median family’s annual inflation-adjusted income is still down more than $3,000.

Most troubling, there’s still very little investment in the buildings, equipment and intellectual property that we ought to be putting into place today as the foundation of our prosperity tomorrow. Who’s preparing the United States for the 21st century? Nobody, really. Not the 22 million private businesses, not the 118 million households, and not the 90,000 state, local or federal government agencies. Since the recession, investments have fallen sharply, and they haven’t gotten back up again. It seems that everyone is still scarred by the Great Recession, and by the collapse of asset bubbles in 2000 and 2006. Gross domestic investment totaled about $3.6 trillion in the second quarter of 2016, about 20% of gross domestic product. That may seem a large sum, but it’s the lowest share of GDP, except during recessions, since 1947.

And, unfortunately, even that weak number grossly exaggerates the actual contribution of this investment in creating new productive capacity for the economy. Why is the figure exaggerated? Because these data are reported on a gross basis, without subtracting the depreciation of capital assets such as equipment, buildings, software and the like. After you subtract the capital that’s used up, net investment totaled only about $750 billion in the second quarter, or 4% of GDP, about half of the average over the post-war period. In fact, net investment has been running at the lowest rates since the Great Depression of the 1930s, suggesting that U.S. investment itself is in a depression.

All told, nearly 9 million jobs were lost during the 2007-2009 slump, not counting the new jobs that were needed to keep up with population growth. The unemployment rate more than doubled to a peak of 10.2% in October 2009 and took seven years to get back to around 5%, seen as normal. Even the current 4.9% rate is seen as a poor depiction of the U.S. labor market’s actual ongoing weakness. So what would a constructive pro-jobs policy of employment insurance look like? It could take many forms, and, despite any central bank role in funding the stimulus, the decision on how to spend the money would remain fully accountable to the democratic process — in the hands of elected lawmakers.

One approach might see Congress adopt a mandate similar to the one it assigned the Fed itself — to maintain low and stable prices while striving for maximum sustainable employment. Such a goal would offer clearer guidelines for when a program of budget spending aided by central bank intervention might be needed, like determining what thresholds of economic pain might trigger its launch. Rather than relying on a spotty, limited system of jobless benefits that can leave the unemployed in or close to poverty, wouldn’t it be better to directly create government jobs in areas where the private sector appears to be falling short?

Employer-of-last-resort-type policies, as proposed by the economist Hyman Minsky, where the government generates employment in socially useful sectors that are underserved by the private sector alone — including infrastructure, education, health care, child and elderly care, and the arts — could be optimal. After all, most people would agree instinctively with Article 23 of the Universal Declaration of Human Rights, adopted by the U.N. in 1948, which states, “Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment.”

A new report from the International Labour Organisation has provided a snapshot of job prospects for young people around the world. Things have worsened this year following a period of slight improvement. Unemployment among 15-24-year-olds has risen to 13.1% in 2016 and is close to its historic peak of 2013. The rate is highest in Arab countries, at 30.6%, and lowest in East Asia, at 10.7%. The report also finds that even where jobs are available to young people, they often fail to provide secure incomes.

Youth unemployment is typically lower in poorer countries than in rich ones. This is because workers in less-developed countries have to take work just to make ends meet and, with few choices, end up in low-paid jobs with no security. Even in richer countries, the young often end up in less-secure employment than the older generation. In 2015, 25% of young workers in OECD countries were in temporary jobs and 26% were employed part-time, often on an involuntary basis. Those rates are more than twice as high as for workers aged 25 to 54.

In fact, young people with jobs are now at greater risk of living in poverty than the elderly in some rich countries. This is especially true in places where there has been a sharp economic shock, such as Greece, Romania and Spain. The need to work to supplement household income in the short-term creates a vicious cycle in which the young forgo training in the skills required for better long-term job prospects. Given the bleak future faced by many, it is little surprise that 40% of 15-29-year-olds in Africa, eastern Europe and Latin America would countenance a permanent move abroad.

“Friday, almost six years to the day, marked the anniversary of former Fed Chairman Ben Bernanke’s address to the Jackson Hole confab, at which he outlined the second phase of quantitative easing [..] Since then, Wilshire Associates estimates the value of U.S. equities has increased by over 100%, some $13.3 trillion..”

The Fed has fueled the populism that has thrown this year’s U.S. elections into an unprecedented tizzy, the Journal wrote in more considered terms in a page-one feature on Friday. While the central bank dealt forcefully with the 2007-08 financial crisis, it failed to anticipate it and subsequently failed to bring about a recovery worthy of the name. What it has accomplished is a massive inflation, not of consumer prices—as officially measured, at least—but of asset prices. Friday, almost six years to the day, marked the anniversary of former Fed Chairman Ben Bernanke’s address to the Jackson Hole confab, at which he outlined the second phase of quantitative easing (central bank–speak for securities purchases to pump money into the financial system), which was popularly dubbed QE2.

Since then, Wilshire Associates estimates the value of U.S. equities has increased by over 100%, some $13.3 trillion. Since Bernanke outlined QE3 in September 2012, U.S. equities are up about 50%, or $8.6 trillion, by Wilshire’s reckoning. In the process, interest rates have hovered at or near record-low levels, tonic for asset values but poison for savers. The uneven impact of the Fed’s policies among the haves and have-nots has further stoked resentment against the monetary authorities. Low yields and inflated asset prices mean modest future returns for all. But though it is equally illegal for the beggar and the king to sleep under the bridge, low returns are less of a burden for those who have already accumulated wealth than for those who have not.

None of this sociology and politics should influence the Fed, but it is an inescapable backdrop to policy decisions. Based on the data on which the central bank professes to depend, the “case for an increase in the federal-funds rate has strengthened in recent months,” Yellen said in her much-anticipated address to the Jackson Hole gathering.

Bill Gross, the billionaire Janus Capital Group Inc. money manager, criticized Fed Chair Janet Yellen’s suggestion that she could consider further asset purchases as the equivalent of “providing a walker or a wheelchair for an ailing economy.” Yellen, speaking Friday at a conference of central bankers and economists in Jackson Hole, Wyoming, said while the U.S. economy has strengthened to the point that interest rate hikes are possible, further asset purchases must remain part of the Fed’s toolkit. Gross, who runs the $1.5 billion Janus Global Unconstrained Bond Fund, has long criticized central bankers in the U.S., Europe and Japan for keeping interest rates ultra-low and artificially inflating asset prices without adding sustainable economic growth.

“She is opening the door to creating even greater asset bubbles as have the BOJ and ECB and SNB by purchasing corporate bonds and stocks,” Gross wrote Friday in an e-mail response to questions. “This is not capitalism. This is providing a walker or a wheelchair for an ailing economy. It may never walk normally again if monetary policy continues in this direction.” Gross said Yellen’s comments didn’t take a September rate hike off the table, especially if job growth is healthy. The Labor Department reports August employment data on Sept. 2. The probability of a hike at the Sept. 21 Fed meeting has risen to 38% from 15% two weeks ago, according to data compiled by Bloomberg.

“To the extent that next month we see a decent job growth number, then I think for sure or close to for sure, you know, in September we’re going to see a Fed hike of 25 basis points,” Gross said in an interview on CNBC. “The market hadn’t expected that.” Tad Rivelle, chief investment officer of fixed income at TCW Group, warned that central bank intervention to keep rates low and prop up asset prices may worsen the impact of an inevitable end to the current credit cycle. “Every cycle in human history has ultimately come to an end,” Rivelle, who helps oversee $195 billion for TCW, said in a Bloomberg Television interview Friday. “Credit-enhanced cycles come to worse ends than the normal kind.”

What had been just a sleepy August is turning into an increasingly painful one for U.S. equity market bulls. Notwithstanding an hour-long burst of optimism that followed Federal Reserve Chair Janet Yellen’s policy speech Friday, the buoyancy that lifted stocks for the first half of the summer has now been missing for the better part of a month. The S&P 500 Index fell 0.7% to 2,169.04 this week, the biggest drop since June, to erase its August gains. Not since the presidential administration of Lyndon B. Johnson have stocks done so little for so long. Unable to break out of a 1.5% band for more than 30 days, the market is locked in its tightest trading range since the end of 1965 amid confusion about Federal Reserve policy and the outlook for earnings.

While losses remain tiny day to day, they’re starting to pile up, with the S&P 500 declining in five of the last six sessions. The Dow Jones Industrial Average slipped 157.17 points in the week to 18,395.4, while the Nasdaq Composite Index retreated 0.4% to 5,218.92. At about 5.8 billion shares, daily volume in U.S. exchanges was lower this week than in any non-holiday period since June 2015. “Once we dug into the report from Yellen, it was kind of a non-event, and we’re ending in the same range we started the week,” Chris Gaffney, president of world markets at St. Louis-based EverBank, said by phone. “The data we got this week was mixed. There’s no clear direction and that’s why we’re sitting in these ranges.”

The world’s biggest pension fund posted a $52 billion loss last quarter as stocks tumbled and the yen surged, wiping out all investment gains since it overhauled its strategy by boosting shares and cutting bonds. Japan’s Government Pension Investment Fund lost 3.9%, or 5.2 trillion yen ($52 billion), in the three months ended June 30, reducing assets to 129.7 trillion yen, it said in Tokyo on Friday. That erases a 4.1 trillion yen investing return for the previous six quarters starting October 2014, the month it decided to put half its assets into equities. The quarterly decline follows a 5.3 trillion yen loss in the fiscal year through March, the worst annual performance since the global financial crisis.

After benefiting from a surge in Japanese equities and a weaker yen earlier in Prime Minister Shinzo Abe’s term, GPIF has posted losses as domestic stocks tumble and gains in the currency reduce the value of overseas assets. Still, for Sumitomo Mitsui Trust Bank Ltd., that’s no reason to veer from the current approach. “Since its investments are tied to market moves, it’s natural that this would happen and there’s no point looking at it with a short-term view,” said Ayako Sera, a Tokyo-based market strategist at the bank. “GPIF is so big that its losses look huge even though the fluctuations in its investments just mirror the market.”

When China’s top securities regulator said recently that it plans to delist Dandong Xintai Electric for falsifying initial public offering documents, it didn’t grab many headlines. But it suggested some far-reaching changes may be afoot. Xintai is the first company to be expelled from Shenzhen’s ChiNext board for such an offense, and one of only a handful that have ever been delisted in China. Its expulsion suggests that regulators are facing up to some unfortunate truths about China’s capital markets. Those markets are, in important ways, only superficially market-like. In the stock market, the government has intervened on a huge scale to prop up prices. Investment in the bond market is overwhelmingly directed to state-owned enterprises. There’s no derivatives market to speak of.

Financial disclosures are often implausible, suspicions of insider trading are rife and doubts about corporate governance are widespread. All these are symptoms of a common ailment: a regulatory system focused not on disclosure and market mechanics but on setting asset prices and allocating returns. In most countries, when companies are considering an IPO, regulators require them to accurately disclose information, then let markets dictate prices. In China, the reverse holds true: Regulators assess a company’s balance sheet and history, mandate an offering price, and then let the market figure out who might be lying or hiding things. The result is that investors, both domestic and foreign, have lost confidence in China’s markets.

Foreign portfolio investment into China is down 60%, year over year, through July. MSCI has repeatedly declined to include China’s domestic equities in its benchmark indexes. Even the much-celebrated Chinese retail investor is staying on the sidelines: Individual investment accounts holding less than 500,000 yuan declined to 46.8 million last month, from 47.4 million in July 2015. This credibility deficit affects all areas of the markets. Major Chinese commercial banks have been trading at a price-to-equity ratio of about five – compared to an average of about 12 for commercial banks elsewhere – because investors think their loan portfolios are much worse off than they’re letting on.

Theresa May will not hold a parliamentary vote on Brexit before opening negotiations to formally trigger Britain’s withdrawal from the European Union, The Telegraph has learned. Opponents of Brexit claim that because the EU referendum result is advisory it must be approved by a vote in the Commons before Article 50 – the formal mechanism to leave the EU – is triggered. However, in a move which will cheer Eurosceptics, The Telegraph has learned that Mrs May will invoke Article 50 without a vote in Parliament It had been suggested – by Tony Blair, the former Labour Prime Minister, and Owen Smith, the Labour leadership candidate, among others – that Remain-supporting MPs could use a Parliamentary vote to stop Brexit.

But sources say that because Mrs May believes that “Brexit means Brexit” she will not offer opponents the opportunity to stall Britain’s withdrawal from the EU. A Downing Street source said: “The Prime Minister has been absolutely clear that the British public have voted and now she will get on with delivering Brexit.” Mrs May has consulted Government lawyers who have told the Prime Minister she has the executive power to invoke Article 50 and begin the formal process of exiting the European Union without a vote in Parliament. Her decision will come as a blow to Remain campaigners, who had been hoping to use Parliament to delay or halt Brexit entirely.

Yesterday we noted that South Carolina Representative Trey Gowdy revealed that Hillary had used a software called “BleachBit” to wipe her servers clean. Gowdy, appearing on Fox News, suggested that using a software like “BleachBit” undermines her claims that she only deleted innocuous “personal” emails from her private server. Specifically, Gowdy told Fox News:

“If she considered them to be personal, then she and her lawyers had those emails deleted. They didn’t just push the delete button, they had them deleted where even God can’t read them. “They were using something called BleachBit. You don’t use BleachBit for yoga emails.” “When you’re using BleachBit, it is something you really do not want the world to see.”

Now, the BleachBit team is using the whole controversy as a marketing tool with a note on their website entitled “BleachBit stifles investigation of Hillary Clinton.” The site even incorporates the now-famous Clinton gaffe where she asked reporters if they wanted to know whether she had wiped her servers clean “like with a cloth or something” pointing out that “it turns out now that BleachBit was that cloth.”

Last year when Clinton was asked about wiping her email server, she joked, “Like with a cloth or something?” It turns out now that BleachBit was that cloth.

The BleachBit team also points out that they have not been served with any warrants or subpoenas at this time even though it doesn’t really matter because the “cleaning process is not reversible.”

As of the time of writing BleachBit has not been served a warrant or subpoena in relation to the investigation. BleachBit is free of charge to use in any environment whether it is personal, commercial, educational, or governmental, and the cleaning process is not reversible.

74% of real estate owners in Greece have property whose taxable value does not exceed 100,000 euros, according to data published on Friday by the Finance Ministry. More precisely, one in two own property that is valued by tax authorities at 50,000 euros or less, while just 8% of real estate owners have property worth between 100,000 and 200,000 euros. The total taxable value of the properties owned by the two groups has been calculated by the ministry, respectively, at 63.6 billion euros and 132 billion euros.

People rarely mean the same thing when they say “religion”, nor do they realize that they don’t mean the same thing. For early Jews and Muslims, religion was law. Din means law in Hebrew and religion in Arabic. For early Jews, religion was also tribal; for early Muslims, it was universal[i]. For the Romans, religion was social events, rituals, and festivals –the word religio was a counter to superstitio, and while present in the Roman zeitgeist had no equivalent concept in the Greek-Byzantine East[ii]. Law was procedurally and mechanically its own thing, and early Christianity, thanks to Saint Augustine, stayed relatively away from the law, and, later, remembering its foundations, had an uneasy relation with it. For instance, even during the Inquisition, a lay court handled the sentencing.

The difference is marked in that Christian Aramaic uses a different word: din for religion and nomous (from the Greek) for law. Jesus, with his imperative “give to Caesar what belongs to Caesar”, separated the holy and the profane: Christianity was for another domain, “the kingdom to come”, only merged with this one in the eschaton. Neither Islam nor Judaism have a marked separation between holy and profane. And of course Christianity moved away from the solely-spiritual domain to embrace the ceremonial and ritualistic, integrating much of the pagan rites of the Levant and Asia Minor.

For Jews today, religion became ethnocultural, without the law – and for many, a nation. Same for Syriacs, Chaldeans, Armenians, Copts, and Maronites. For Orthodox and Catholic Christians religion is aesthetics, pomp and rituals, plus or minus some beliefs, often decorative. For most Protestants, religion is belief with neither aesthetics, pomp nor law.

Further East, for Buddhists, Shintoists and Hindus, religion is practical and spiritual philosophy, with a code of ethics (and for some, cosmogony). So when Hindu talk about the Hindu “religion” they don’t mean the same thing to a Pakistani as it would to a Hindu, and certainly something different for a Persian. When the nation-state idea came about, things got much, much more complicated. When an Arab now says “Jew” he largely means something about a creed; to Arabs, a converted Jew is no longer a Jew. But for a Jew, a Jew is someone whose mother is a Jew. (This has not always been the case: Jews were quite proselytic during the early Roman empire). But Judaism, thanks to modernism, somewhat merged into nation-state, and now can also mean a nation.

“.. it leaves young people paying twice, saving for their own pensions while also paying for the pensions of older generations through taxation.”

“Since 2007, the real disposal income of pensioners has risen by almost 10%. Those over the age of 65 have harvested fully two-thirds of that £2.7tn increase in national wealth. By contrast, since 2007, working-age households with children have achieved income gains of only about 3%, while the incomes of those without children have fallen by 3%,” he said.

This can only go horribly wrong, there is no other possible outcome, but it’s a topic politicians either don’t understand or don’t want to touch. Which is why I wrote Basic Income in The Time of Crisis a month ago. There is not much time left.

Older people have saddled the younger generation with an excessive bill for state pensions while grabbing an ever-greater share of NHS spending, according to a report that calls for intergenerational rebalancing. The report from the Intergenerational Foundation (IF) said spending promises on state and public sector pensions are “overwhelming young people’s prospects”. The thinktank is calling on the prime minister, Theresa May, to abandon triple lock protection, which promises that the state pension will rise each year by whatever is highest out of inflation measured by the consumer price index, average earnings growth or 2.5%. The former pensions minister Ros Altmann has called for the triple lock to be scrapped. The Department for Work and Pensions has declined to rule out a review of the “totemic” policy in the coming months.

The report estimates that workers are paying £2,846 a year each to cover the cost of paying state pensions. Public sector pension liabilities, for schemes such as retired civil servants, have risen by 12% to nearly £44,000 per worker, with total liabilities at £1.4tn, it added. Angus Hanton, the co-founder of IF, said: “Public sector pensions represent one of the largest unfunded burdens for younger taxpayers, who will not retire at the same age, or on the same terms, while having to contribute more to their own pensions. “Increasing retirement ages and moving to career average pensions will not be enough to stall the pension burden avalanche that is bearing down on the young.

Auto-enrolment is an apparent success, except that it leaves young people paying twice, saving for their own pensions while also paying for the pensions of older generations through taxation.” But charity Age UK said the vast majority of pensioners have contributed throughout their life to the state pension, which remains lower than the amount paid in many other western countries. Caroline Abrahams, the charity director at Age UK, pointed out that 1.6 million older people live in poverty in the UK. “A strong pensions system that provides a decent quality of life in retirement is central to a civilised society and in the best interests of us all,” she said.

Britain’s millennials, already suffering for the economic mistakes of the past, now face the prospect of having to pay for the country’s future. Pension-fund liabilities in the U.K. increased to a record £1 trillion ($1.3 trillion) after the Bank of England’s interest-rate cut this month, hurt by quantitative easing and razor-thin yields. It’s Britain’s version of what Duquesne Chairman Stanley Druckenmiller calls “Generational Theft” in the U.S. Plunging bond yields have caused pension liabilities to balloon and it could get even worse because the BOE will probably reduce interest rates further this year. Deficits for defined-benefit-pension funds already rose by more than 40% in the two months through July, following the vote to leave the EU and the central bank’s subsequent decision to increase quantitative easing, according to consulting firm Mercer.

“The Bank of England clearly believes that the effect on our pension system is acceptable long-term collateral damage” to prevent a short-term recession, said David Blake, professor of pension economics at London’s Cass Business School. Younger workers will “have to save more – which they appear reluctant to do – or be prepared to work much longer.” The increased bond-purchase program has had a relatively limited impact on pension deficits, according to the minutes of the BOE’s Monetary Policy Committee meeting on Aug. 3. While the fund managers have to move into riskier assets, that helps to support the economy, Governor Mark Carney said Aug. 4. “That makes it less likely that we will have a very long period of high unemployment, low output, and very low interest rates,” Carney said.

Money managers, however, appear to be unwilling to offload their higher-yielding gilts because they’re worried about generating enough returns to pay their members. The BOE last week failed to find enough investors who were prepared to sell their longer-maturity gilts, a slice of the credit market dominated by pensions and insurers. Companies that run defined-benefit pension funds are also starting to worry. Postal-service operator Royal Mail said last week it may not be able to keep its program running beyond 2018. That’s because its annual contributions could more than double to over £900 million.

Stock investors have had one sweet summer so far watching the markets edge higher. With the Standard & Poor’s 500-stock index at record highs and nearing 2,200, what’s not to like? Here’s something. As shares climb, so too do the prices companies are paying to repurchase their stock. And the companies doing so are legion. Through July of this year, United States corporations authorized $391 billion in repurchases, according to an analysis by Birinyi Associates. Although 29% below the dollar amount of such programs last year, that’s still a big number. The buyback beat goes on even as complaints about these deals intensify. Some critics say that top managers who preside over big stock repurchases are failing at one of their most basic tasks: allocating capital so their businesses grow.

Even worse, buybacks can be a way for executives to make a company’s earnings per share look better because the purchases reduce the amount of stock it has outstanding. And when per-share earnings are a sizable component of executive pay, the motivation to do buybacks only increases. Of course, companies that conduct major buybacks often contend that the purchases are an optimal use of corporate cash. But William Lazonick, professor of economics at the University of Massachusetts Lowell, and co-director of its Center for Industrial Competitiveness, disagrees. “Executives who get into that mode of thinking no longer have the ability to even think about how to invest in their companies for the long term,” Mr. Lazonick said in an interview. “Companies that grow to be big and productive can be more productive, but they have to be reinvesting.”

[..] The net profit test, said Gary Lutin, a former investment banker who heads the forum, “cuts through to the essential logic of comparing a process that grows a bigger pie – reinvestment – to a process that divides a shrunken pie among fewer people: share buybacks. “It’s pretty obvious,” he continued, “that even mediocre returns from reinvesting in the production of goods and services will beat what’s effectively a liquidation plan.” Investors may be dazzled by the earnings-per-share gains that buybacks can achieve, but who really wants to own a company in the process of liquidating itself? Maybe it’s time to ask harder questions of corporate executives about why their companies aren’t deploying their precious resources more effectively elsewhere.

The Bank of Japan’s controversial march to the top of shareholder rankings in the world’s third-largest equity market is picking up pace. Already a top-five owner of 81 companies in Japan’s Nikkei 225 Stock Average, the BOJ is on course to become the No. 1 shareholder in 55 of those firms by the end of next year, according to estimates compiled by Bloomberg from the central bank’s exchange-traded fund holdings. BOJ Governor Haruhiko Kuroda almost doubled his annual ETF buying target last month, adding to an unprecedented campaign to revitalize Japan’s stagnant economy. While bulls have cheered the tailwind from BOJ purchases, opponents say the central bank is artificially inflating equity valuations and undercutting efforts to make public companies more efficient.

Traders worry that the monetary authority’s outsized presence will make some shares harder to buy and sell, a phenomenon that led to convulsions in Japan’s government bond market this year. “Only in Japan does the central bank show its face in the stock market this much,” said Masahiro Ichikawa at Sumitomo Mitsui Asset Management. “Investors are asking whether this is really right.” While the BOJ doesn’t acquire individual shares directly, it’s the ultimate buyer of stakes purchased through ETFs. Estimates of the central bank’s underlying holdings can be gleaned from the BOJ’s public records, regulatory filings by companies and ETF managers, and statistics from the Investment Trusts Association of Japan. Forecasts of the BOJ’s future shareholder rankings assume that other major investors keep their positions stable and that policy makers maintain the historical composition of their purchases.

[..] Japan’s government bond market offers a guide to the risks of further intervention in stocks, said Akihiro Murakami, the chief quantitative strategist for Japan at Nomura in Tokyo. JGB volatility soared to the highest level since 1999 in April, while trading volume has slumped as the central bank’s holdings swelled to about a third of the market. It’s still buying at an annual rate of 80 trillion yen. “If the BOJ does not sell stocks, then liquidity will disappear,” Murakami said. “As liquidity falls, the number of shares you can buy starts to decline – the same thing that’s happening in the JGB market.” The central bank owned about 60% of Japan’s domestic ETFs at the end of June, according to Investment Trusts Association figures, BOJ disclosures and data compiled by Bloomberg. Based on a report released on Friday by the Investment Trusts Association, that figure rose to about 62% in July.

Japan’s economic growth ground to a halt in April-June after a stellar expansion in the previous quarter on weak exports and capital expenditure, putting even more pressure on premier Shinzo Abe to come up with policies that produce more sustainable growth. The world’s third-largest economy expanded by an annualized 0.2% in the second quarter, less than a median market forecast for a 0.7% increase and a marked slowdown from a revised 2.0% increase in January-March, Cabinet Office data showed on Monday. The weak reading underscores the challenges policymakers face in putting a sustained end to two decades of deflation with the initial boost from Abe’s stimulus programs, dubbed “Abenomics,” fading. “Overall it looks like the economy is stagnating. Consumer spending is weak, and the reason is low wage gains.

There is a lot of uncertainty about overseas economies, and this is holding back capital expenditure,” said Norio Miyagawa, senior economist at Mizuho Securities. “The government has already announced a big stimulus package, so the next question is how the Bank of Japan will respond after its comprehensive policy review, which is sure to lead to a delay in its price target.” On a quarter-on-quarter basis, GDP marked flat growth in April-June, weaker than a median market forecast for a 0.2% rise. Private consumption, which accounts for roughly 60% of GDP, rose 0.2% in April-June, matching a median market forecast but slowing from a 0.7% increase in the previous quarter. Capital expenditure declined 0.4% in April-June after a 0.7% drop in the first quarter, the data showed, suggesting that uncertainty over the global economic outlook and weak domestic markets are keeping firms from boosting spending.

The last few months have seen trillions of dollars of fresh credit puked into existence in China to enable goal-seeked growth numbers to creep lower (as opposed to utterly collapse). The problem is… the Chinese are hoarding that cash at the fastest pace since Lehman as liquidity concerns flood through the nation. China’s M2, a broad gauge of money supply including savings deposits, rose at the slowest pace in 15 months and trailed the government’s full-year target of +11% in July. But, as Bloomberg details, by contrast, M1, the total of cash, checks and demand deposits, rose at the quickest pace in six years…

That shows companies “are holding all this cash, but investment returns are low and there are few options for projects,” said Liu Dongliang, a senior analyst at China Merchants Bank Co. in Shenzhen.

In fact, no matter what has been done since the Chinese stock market crashed, the Chinese have been hoarding cash…

In fact, the hoarding of cash in China corresponded with the top in 1999/2000, and the top in 2007…

“..If people don’t feel like they are beneficiaries of economic development, if they don’t think their lot in life is improving, that’s when they start getting all kinds of ideas.” We wouldn’t want that, would we?

China expects next month’s summit of the G20 which it is hosting will focus on boosting economic growth and other financial issues rather than disputes like the South China Sea, senior officials said on Monday. The summit of the world’s 20 biggest economies in the eastern city of Hangzhou will be the highlight of President Xi Jinping’s diplomatic agenda this year, and the government is keen to ensure it proceeds smoothly. The Sept 4-5 leaders’ meeting comes as clouds continue to hover over global growth prospects and worries about China’s own slowing economy. Last month’s meeting of G20 policymakers was dominated by the impact of Britain’s exit from Europe and fears of rising protectionism.

Yi Gang, a vice governor of the People’s Bank of China, said the summit will focus on how to stimulate sluggish global economic growth through open, inclusive trade and the development of robust financial markets. “We need to instil market confidence and ensure there are no competitive devaluations but rather let the market determine exchange rates,” Yi told a news briefing, adding this would be the first G20 to discuss foreign exchange markets in such detail. The G20 will also discuss how to better monitor and respond to risks presented by global capital flows, he said. Despite increasingly protectionist rhetoric around the world, the G20 is strongly opposed to anti-trade and anti-investment sentiment, Vice Finance Minister Zhu Guangyao said.

“We really do need to make sure that the people, the public, benefit from economic development and growth. If people don’t feel like they are beneficiaries of economic development, if they don’t think their lot in life is improving, that’s when they start getting all kinds of ideas.”

Germany, for example, does not want zero interest rates and those trillions of euros created through ECB’s massive asset purchases. Germany is a fully-employed economy with balanced public finances and an exploding current account surplus of 9% of GDP. With a 1.8% annual growth in the first half of this year, the economy is running almost an entire percentage point above its potential and noninflationary growth. [..] Now, for a sharp contrast, take a look at Italy. On a quarterly basis, there has been virtually no growth in the first half of this year. In fact, the economy has been declining and stagnating over the last four years, and is currently experiencing a price deflation. Italy’s 3 million of unemployed in June (10.6% of the labor force) are only slightly below that level in the same month of last year. A shocking 36.5% of the country’s youth is out of work.

[..] Germany, close to one-third of the euro area’s products and services, does not need, and does not want, the ECB’s extraordinarily loose monetary policy. But the hard-pressed economies of France, Italy, Spain, Portugal and Greece – another 50% of the euro area output – need that oxygen to survive. Easy money is all they got. Their budget deficits of 2-5% of GDP, and their rising public debt of 120-185% of GDP, leave no room for fiscal policy to support demand, output and employment. The EU authorities, whoever they are, have relented from imposing penalties on Spain and Portugal – and have looked the other way in the case of France – for transgressing the euro area budget deficit commitments. But they continue to insist on labor market deregulations and on other socially and politically sensitive measures that act as short-term growth and employment killers.

Budget deficits may be coming out of retirement. With economies all over the world growing too slowly and little scope left for new monetary stimulus, governments are turning their attention back to fiscal policy. This shift in thinking is overdue. In many countries, though not all, fiscal expansion is not just possible but also necessary. A resumption of budget activism, if it happens, won’t be riskless, so caution will be needed. A stubborn commitment to fiscal austerity, though, would be riskier still. The immediate response to the 2008 crash included fiscal easing – sometimes deliberate and sometimes the automatic consequence (higher public spending, lower tax revenues) of slumping activity. In most cases, expansionary budgets lessened the impact of collapsing demand, but they also pushed up public debt.

Before long, governments started tightening their budgets to get debt back under control. With demand still lacking, the hope was that monetary expansion would be enough to support recovery. It wasn’t. Governments have found that monetary policy is losing its potency. Interest rates are close to zero in many countries, and in some even negative. Huge bond-buying programs – QE – have delivered an additional monetary punch, but again with diminishing effects, and with a growing risk of financial instability as well. So fiscal policy, despite the recent growth of public debt, is back on the agenda. Central banks have been leading the call. In June, Fed Chair Janet Yellen told the Senate Banking Committee that U.S. fiscal policy had “not played a supportive role.”

In July, the ECB’s chief economist, Peter Praet, said “monetary policy cannot be the only remedy to our current economic challenges.” Governments are responding. Following the U.K.’s decision to quit the EU, the new Chancellor of the Exchequer, Philip Hammond, has promised a break with his predecessor’s approach and says he will “reset” fiscal policy. Added investment in infrastructure is under consideration as part of a new industrial strategy.

London could bear the brunt of a post-Brexit vote downturn, according to economic indicators in the weeks since the EU referendum pointing to job cuts, falling house prices and a decline in business activity in the capital. London’s economy was relatively unaffected by the previous downturn, compared with other UK regions, but early signs from the latest bout of turmoil suggest that it might not get off so lightly again, economists have said. This could have consequences for the government’s tax receipts and overall growth, given the city’s contribution to the UK economy. One key concern about the impact on London of the vote to leave the EU stems from the capital’s dependence on financial services.

London could lose its status as Europe’s financial capital if the UK leaves the single market and City banks are stripped of their lucrative EU “passports” that allow them to sell services to the rest of the bloc. Samuel Tombs, the chief UK economist at consultancy Pantheon Macroeconomics, said: “London was unscathed by the last recession, but its dependence on finance now is its achilles heel.” He highlighted a potential change of fortunes for London in a note to clients after surveys showed that companies in the capital had taken a hit from the referendum result. London has been the UK’s growth star for the past two decades, outperforming the rest of the country, Tombs said. “Surveys since the referendum, however, indicate that the capital is at the sharp end of the post-referendum downturn.” added.

London was the worst performer out of 12 regions on one measure of business activity for the weeks following 23 June, the day of the referendum. Companies in the capital cut jobs and suffered the sharpest fall in output since early 2009, when the UK was mired in recession, according to the Lloyds Bank regional purchasing managers’ index. Clients appeared reluctant to commit to new contracts, London businesses said, leading to a slump in order books. “The capital was hit harder than any other UK region,” said Paul Evans, the regional director for London at Lloyds commercial banking.

The EU should grant Turks visa-free travel in October or the migrant deal that involves Turkey stemming the flow of illegal migrants to the bloc should put be put aside, Foreign Minister Mevlut Cavusoglu told a German newspaper. Asked whether hundreds of thousands of refugees in Turkey would head to Europe if the EU did not grant Turks visa freedom from October, he told Bild newspaper’s Monday edition: “I don’t want to talk about the worst case scenario – talks with the EU are continuing but it’s clear that we either apply all treaties at the same time or we put them all aside.” Visa-free access to the EU – the main reward for Ankara’s collaboration in choking off an influx of migrants into Europe – has been subject to delays due to a dispute over Turkish anti-terrorism legislation and Ankara’s crackdown after a failed coup.

When Ambrose starts talking about energy -or anything other than finance, for that matter- I brace myself. He tends to go into cheerleading mode. In this piece, the only problem he sees is intermittency, and even that mostly as not a real issue. Advancements in technology, don’t you know…

Wind power has few friends on the political Right. No other industry elicits such protest from the conservative press, Tory backbenchers, and free market economists. The vehemence is odd since wind generates home-made energy and could be considered a ‘patriotic choice’. It dates back to the 1990s and early 2000s when the national wind venture seemed a bottomless pit for taxpayer subsidies. Pre-modern turbines captured trivial amounts of energy. The electrical control systems and gearboxes broke down. Repair costs were prohibitive. Yet as so often with infant industries, early mishaps tell us little. Costs are coming down faster than almost anybody thought possible. As the technology comes of age – akin to gains in US shale fracking – the calculus is starting to vindicate Britain’s vast investment in wind power.

The UK is already world leader in offshore wind. The strategic choice now is whether to go for broke, tripling offshore capacity to 15 gigawatts (GW) by 2030. The decision is doubly-hard because there is no point dabbling in offshore wind. Scale is the crucial factor in slashing costs, so either we do it with conviction or we do not do it all. My own view is that the gamble is worth taking. Shallow British waters to offer optimal sites of 40m depth. The oil and gas industry knows how to operate offshore. Atkins has switched its North Sea skills seamlessly to building substations for wind. JDR in Hartlepool sells submarine cables across the world. Wind power is a natural fit.

When Goldman warned on Friday that a “big drop” in the market is possible before the S&P hits the firm’s year end price target of 2,100, one of the bearish reasons brought up by the firm’s chief strategist David Kostin is that stocks are now massively overvalued. In fact, according to Goldman , while the aggregate market is more overvalued than 86% of all recorded instances, the median stocks has never been more overvalued, i.e., is in the 100% valuation percentile, according to some key metrics such as Price-to-Earnings growth and EV/sales.

This is what Goldman said: “Valuation is a necessary starting point of any drawdown risk analysis. At 16.7x the forward P/E multiple of the S&P 500 index ranks in the 86th percentile relative to the last 40 years. Most other metrics paint a similar picture of extended valuation. The median stock in the index trades at the 99th percentile of historical valuation on most metrics (see Exhibit 3).” Goldman’s conclusion: “The most likely future path of US equities involves a lower valuation.”

One of the great ironies of business today is that the richest and most powerful companies in the world are more involved than ever before in the capital markets at a time when they do not actually need any capital. Take Apple, which has around $200bn sitting in the bank, yet has borrowed billions of dollars in recent years to buy back shares in order to bolster its stock price, which has lagged recently. Why borrow? Because it is cheaper than repatriating cash and paying US taxes, of course. The financial engineering helped boost the California company’s share price for a while. But it did not stop activist investor Carl Icahn — who had manically advocated borrowing and buybacks — from dumping the stock the minute revenue growth took a turn for the worse in late April. Apple is not alone in eschewing real engineering for the financial kind.

Top-tier US businesses have never enjoyed greater financial resources. They have $2tn in cash on their balance sheets – enough money combined to make them the tenth largest economy in the world. Yet they are also taking on record amounts of debt to buy back their own stock, creating a corporate debt bubble that has already begun to burst (witness Exxon’s recent downgrade). The buyback bubble is only one part of a larger trend, which is that the business of corporate America is no longer business – it is finance. American firms today make more money than ever before by simply moving money around, getting about five times the revenue from purely financial activities, such as trading, hedging, tax optimisation and selling financial services, than they did in the immediate postwar period. No wonder share buybacks and corporate investment into research and development have moved inversely in recent years.

It is easier for chief executives with a shelf life of three years to try to please investors by jacking up short-term share prices than to invest in things that will grow a company over the long haul. It is telling that private firms invest twice as much in things like new technology, worker training, factory upgrades and R&D as public firms of similar size — they simply do not have to deal with market pressure not to. Indeed, the financialisation of business has grown in tandem with the rise of the capital markets and the financial industry itself, which has roughly doubled in size as a percentage of gross domestic product over the past 40 years (even the financial crisis did not keep finance down; the industry itself shrank only marginally and the largest institutions that remained became even bigger). As finance grew, so did its profits — the industry creates only 4% of US jobs yet takes around 25% of the corporate profit share.

Former Reagan administration aide David Stockman has a message for the next president: The markets are going down for the count and you can’t do anything about it! President Ronald Reagan’s director of the Office of Management and Budget said in a recent CNBC interview it doesn’t matter if Hillary Clinton or Donald Trump gets elected in November — neither will be able to stop the economic meltdown that’s looming. Wall Street seems to have its mind made up about which candidate it prefers. More than 70% of respondents to a recent Citigroup poll of institutional clients said the former secretary of state, first lady and New York senator would likely become the U.S.’s 45th president. Just over 10% gave Trump the nod, and small business owners appear to be divided between the GOP and Democratic standard bearers.

Stockman, however, doesn’t believe either one can prevent what may be on the horizon. “There’s no way the next president can stop a recession that’s already baked into the cake,” Stockman said Thursday in the “Futures Now” interview. Stockman has been calling for a major market downturn and global recession for some time, but he is more certain than ever that it could happen during this political cycle. He pointed to depleting earnings, peaked auto sales, inventory ratios and issues in the freight and rail space as some key indicators that the U.S. economy is more unstable than people would like to believe. “The idea that this economy is somehow going to get stronger in the second half, or that the next president can stall a recession I think is wrong,” he said.

According to Stockman, there is “plenty of evidence” that the U.S. will slip into a recession by year-end or shortly after. And as he sees it, that could send the S&P 500 spiraling to levels not seen since 2012. “The market can easily drop to 1,300,” Stockman warned. That represents a nearly 40% fall from where the large-cap S&P 500 Index is currently trading. “We have been trading in a range for the last 600 days plus or minus days 2,060 on the S&P 500. … Why would you hang in a boiling pot where the upside is 2% and the downside is 40?” Stockman noted that if given a choice between Trump and Clinton, he certainly would not want another Clinton in the White House. Instead, he said America needs a disruptor like Trump to “break the chains of the status quo” and manage the country in a different way than what has been done in the last decade.

“Print the money” has been called crazy talk, but it may be the only sane solution to a $19 trillion federal debt that has doubled in the last 10 years. The solution of Abraham Lincoln and the American colonists can still work today.
“Reckless,” “alarming,” “disastrous,” “swashbuckling,” “playing with fire,” “crazy talk,” “lost in a forest of nonsense”: these are a few of the labels applied by media commentators to Donald Trump’s latest proposal for dealing with the federal debt. On Monday, May 9th, the presumptive Republican presidential candidate said on CNN, “You print the money.”

The remark was in response to a firestorm created the previous week, when Trump was asked if the US should pay its debt in full or possibly negotiate partial repayment. He replied, “I would borrow, knowing that if the economy crashed, you could make a deal.” Commentators took this to mean a default. On May 9, Trump countered that he was misquoted:

People said I want to go and buy debt and default on debt – these people are crazy. This is the United States government. First of all, you never have to default because you print the money, I hate to tell you, okay? So there’s never a default.

The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default.

Paying the government’s debts by just issuing the money is as American as apple pie – if you go back far enough. Benjamin Franklin attributed the remarkable growth of the American colonies to this innovative funding solution. Abraham Lincoln revived the colonial system of government-issued money when he endorsed the printing of $450 million in US Notes or “greenbacks” during the Civil War. The greenbacks not only helped the Union win the war but triggered a period of robust national growth and saved the taxpayers about $14 billion in interest payments. But back to Trump. He went on to explain:

I said if we can buy back government debt at a discount – in other words, if interest rates go up and we can buy bonds back at a discount – if we are liquid enough as a country we should do that.

Apparently he was referring to the fact that when interest rates go up, long-term bonds at the lower rate become available on the secondary market at a discount. Anyone who holds the bonds to maturity still gets full value, but many investors want to cash out early and are willing to take less. As explained on MorningStar.com:

If a bond with a 5% coupon and a ten-year maturity is sold on the secondary market today while newly issued ten-year bonds have a 6% coupon, then the 5% bond will sell for $92.56 (par value $100).

Central banks and governments of rich countries are running out of ammunition for stimulating their economies, says Raghuram Rajan, the head of the Indian central bank — but they can never admit as much. Speaking to the Financial Times at the University of Chicago Booth School of Business in London, Mr Rajan criticised efforts to use fiscal and monetary policy and infrastructure programmes to boost growth rates in advanced economies. Long a critic of low interest rates in rich countries that can drive hot-money flows to poorer parts of the world, the governor of the Reserve Bank of India suggested that loose policies were also weakening the underlying performance of advanced economies.

Although Mr Rajan said there were limits on stimulus, he said central banks “cannot claim to be out of ammunition because immediately that would create the wrong kind of expectations, so there’s always something up their sleeves”. Mr Rajan said he was a supporter of stimulus policies to “balance things out” over short periods when households or companies were proving excessively cautious with their spending. But eight years after the financial crisis, we “have to ask ourselves is that the real problem?”. “I have this image of stimulus as a bridge,” he said. “As the economy goes down, there is an expectation it will come up. Stimulus is a bridge which smoothes over the growth rate of the economy and prevents damaging expectations from building up.”

If stimulus went on for a long time, if it did not work, he said, the adjustment would be sharp, indicating there was little room for further stimulus. Mr Rajan warned governments not to rely too much on fiscal stimulus through cutting taxes or increasing public spending. “If your debt to GDP is over 100%, [and you] do more fiscal stimulus, you’d better have a pretty high rate of return in mind, otherwise your younger and middle-aged generations are thinking ‘This thing is not going to return enough, but I’m going to have to pay for it’.”

The average asking price of a typical first-time buyer home leapt by 6.2% in a month after buy-to-let investors rushed to buy properties before last month’s stamp duty increase, according to figures on Monday. The average for properties coming on to the market in England and Wales with two bedrooms or fewer was £11,298 higher in May than in April, at £194,224, according to data from the property website Rightmove. The figures, based on properties listed during the month, showed that across the UK the average price of a first-time buyer property had risen by 11.4% since May 2015. In hotspots such as Croydon, Dartford and Luton – all towns within easy commuting distance of central London – asking prices were up by more than 18% over the year.

The figures do not include inner-London homes. The website said strong demand from investors keen to buy before the introduction of the surcharge on second homes had caused a “property drought” at the lower end of the market, putting upwards pressure on prices for those homes that were being made available. However, Rightmove’s director, Miles Shipside, said: “It remains to be seen if these prices can be achieved and there may be some over pricing in the market. It is also a reflection of better quality property coming to market in this sector which is now targeting owner-occupiers rather than landlords.”

CERN has just announced the discovery of a new particle, called the “FERIR”. This is not a fundamental particle of matter like the Higgs Boson, but an invention of economists. CERN in this instance stands not for the famous particle accelerator straddling the French and Swiss borders, but for an economic research lab at MIT—whose initials are coincidentally the same as those of its far more famous cousin. Despite its relative anonymity, MIT’s CERN is far more important than its physical namesake. The latter merely informs us about the fundamental nature of the universe. MIT’s CERN, on the other hand, shapes our lives today, because the discoveries it makes dramatically affect economic policy.

CERN, which in this case stands for “Crazy Economic Rationalizations for aNomalies”, has discovered many important sub-economic particles in the past, with its most famous discovery to date being the NAIRU, or “Non-Accelerating Inflation Rate of Unemployment”. Today’s newly discovered particle, the FERIR, or “Full Employment Real Interest Rate”, is the anti-particle of the NAIRU. Its existence was first mooted some 30 months ago by Professor Larry Summers at the 2013 IMF Research Conference. The existence of the FERIR was confirmed just this week by CERN’s particle equilibrator, the DSGEin. Asked why the discovery had occurred now, Professor Krugman explained that ever since the GFC (“Global Financial Crisis”), economists had been attempting to understand not only how the GFC happened, but also why its aftermath has been what Professor Summers characterized as “Secular Stagnation”.

Their attempts to understand the GFC continued to fail, until Professor Summers suggested that perhaps the GFC had destroyed the NAIRU, leaving the ZLB (“Zero Lower Bound”) in its place. This could have happened only if there was a mysterious second particle, which was generated when a NAIRU equilibrated with a GFC. Rather than remaining in equilibrium, as sub-economic particles do in DSGEin, NAIRU apparently vanished instantly when the GFC appeared. Something else must have taken its place. DSGEin was unable to help here, since it rapidly returned to equilibrium—while the real world that it was supposed to simulate clearly had not. CERN’s attempts to model this phenomenon in DSGEin were frustrated by the fact that a GFC does not exist inside a DSGEin—in fact, the construction of the DSGEin was predicated on the non-existence of GFCs.

The ever-practical Professor Krugman recently suggested a way to overcome this problem. Why not turn to the real world, where GFCs exist in abundance, and feed one of those into the DSGEin? Unfortunately, the experiment destroyed the DSGEin, since the very existence of a GFC within it put it through an existential crisis. However, before it broke down (while mysteriously singing the first verse of “Daisy, Daisy, give me your answer do”), the value for the NAIRU in DSGEin suddenly turned negative. This led Professor Summers to the conjecture that perhaps there was a negative anti-particle to the NAIRU, which he dubbed the FERIR.

Fourteen. Trillion. Dollars. That’s how much the U.S. government “owes.” You hear that massive number all the time, right? And people are forever telling you that you and your family are on the hook to pay off that scary huge number. There are 125 million U.S. households. You do the arithmetic. The horror. What those scare-mongers don’t tell you, and generally don’t even understand: it actually makes almost no sense to call that figure “the national debt.” And no, you’re not on the hook to pay it back. Imagine this: you’re the queen or king of a sovereign country. You decide to mint and issue a bunch of tin coins that your people will find useful. You use those coins to buy stuff from people in the private sector, and pay them to do work. Voilà, the people have money.

Is your government now in “debt” as a result of that “deficit spending”? Does it have to “pay” something to somebody at some point in the future? Do you have to redeem those coins for wheat or pigs or anything else? Obviously not. There’s just a bunch of money out there that people can use. You’ve made no promise that your treasury will ever redeem those coins for anything. They just circulate. Those government-issued assets, held by the private sector, are only “liabilities” to the government in the most pettifogging accounting sense. If you “owed” some money that you would never, ever have to pay, would you put that on your balance sheet as a liability? Would it be anything beyond a pro forma entry designed to satisfy some obsessive impulse for accounting closure? A debt that will never be paid off is a very questionable “liability.”

That’s essentially the situation with the U.S. national “debt.” The U.S. issues money by deficit spending. It puts more money into private accounts than it takes out via taxes. The private sector has more balance-sheet assets (but no more liabilities, so it has more “net worth,” the balancing item on the righthand side of its balance sheet). The treasury has made no promises to redeem that new money for…anything (except maybe…different government-issued assets). It’s just out there. Now it’s true that the U.S. et al operate under an arguably archaic and purely self-imposed rule: their treasuries are required to issue bonds equal to that deficit spending. This is a straightforward asset swap: the private sector gives checking-account deposits (back) to the government, and the government gives bonds in return.

Private sector assets and net worth are unaffected by that accounting swap; it just changes the private-sector portfolio mix — more bonds, less “cash.” (Treasury “forces” the private sector to make that collective portfolio-adjusting swap through the simple expedient of selling bonds at an attractive price — a point or two below similar deals in the private sector.) The same kind of asset swap happens when the Fed “prints money” for quantitative easing. The private sector gives bonds (back) to the government, and the Fed gives “reserves” in return — deposits in banks’ Fed accounts. Sure, the Fed creates those reserves ab nihilo, but they’re not a money injection into the private sector, like deficit spending. They’re just swapped for bonds. That accounting event doesn’t increase private-sector assets or net worth. It just changes the private-sector portfolio mix (more reserves, less bonds).

In any case, the private sector is holding government-issued assets. Whether they consist of bonds, “cash,” or reserves, is it realistic to call that money originally spent into private accounts a “debt” for the government? Is it in any real sense a government “liability” if it will never be redeemed for anything?

Drag your attention away from the Middle East for a moment. While policymakers have been focused on Saudi Arabia’s oil market machinations, what really matters right now is happening 3,000 miles away in the Niger River delta. The country that was, until recently, Africa’s biggest crude producer is slipping back into chaos. A wave of attacks and accidents have hit infrastructure, taking Nigeria’s output down to 20-year lows. Oil prices are responding, rising to their highest in more than six months. Part of this is explained by the IEA lifting demand estimates this week. But taking both things together, it’s easy to doubt whether current oil surpluses are sustainable. With no solution in sight to the problems that beset the delta’s creeks and mangrove swamps, production from onshore and shallow-water oil fields looks vulnerable.

If the latest group of freedom fighters seeks to outdo its predecessors, then deepwater facilities may be at risk too.The Niger Delta Avengers have certainly been busy, forcing Shell’s Forcados terminal to shut in about 250,000 barrels of daily exports; and breaching an offshore Chevron facility in the 160,000 barrels per day Escravos system. In April, ENI had to declare force majeure – letting it stop shipments without breaching contracts – on exports of its Brass River grade after a pipeline fire. It’s hard to see any long-term let-up given Nigeria’s record on fixing this problem. The previous wave of discontent, which hit a peak in 2009, only came to an end when President Yar’Adua offered amnesty, training programs and monthly cash payments to nearly 30,000 militants, at a yearly cost of about $500 million.

Some leaders of the Movement for the Emancipation of the Niger Delta (MEND), the militant group, got lucrative security contracts. But the failure to properly address local grievances means it was only a matter of time before another wave of angry young men took up the fight for a better deal for southern Nigeria. The crisis has been hastened by new president Muhammadu Buhari’s termination of the ex-militants’ security contracts and his seeking the arrest of former MEND leaders. The Avengers now say they want independence for the Niger River delta. And it’s not as if Nigeria’s oil woes are limited to the militants. Exxon had to declare force majeure on Qua Iboe exports after a drilling platform ran aground and ruptured a pipeline, while Shell did similar with Bonny Light exports after a leak from a pipeline feeding the terminal.

China’s housing market is showing nascent signs of recovery after a two-year downturn, helping to counter a slowdown in the broader economy but prompting fresh warnings about a buildup of debt. Property prices and sales have risen in recent months, driven by looser lending policies, accompanied by a sustained advance in new construction. That occurred even though China is weighed down by unsold homes with enough square footage to fill seven Manhattan islands. “Property developers’ appetite has returned,” said Xia Qiang, a senior partner at Yi He Capital, which provides loans to property firms. “Just two weeks ago four developers from Fujian and Zhejiang asked if there were any projects they could invest in in Shanghai.”

From January to April, housing sales rose 61.4% to 2.41 trillion yuan ($369 billion) from a year ago, the National Bureau of Statistics said on Saturday. Property investment in the first four months of this year rose 7.2% to 2.54 trillion yuan. Construction starts gained 21.4% to 434.3 million square meters. But the rosy statistics present a quandary for Chinese officials. After engineering a credit-fueled property upturn, Beijing has started tapping the brakes amid concern that it has overshot, economists say. Among the fixes Beijing has imposed are a decrease in bank lending and more purchase restrictions on some of the hottest property markets, including Shanghai and Shenzhen. A column in the official People’s Daily recently criticized debt-fueled growth policies, warning that China faces a “property bubble.”

The zigzag policy reflects China’s tough balancing act in a nation where empty apartment towers ring many smaller cities. It wants to boost the property sector enough to hit its 6.5%-plus growth target for 2016 without making its overcapacity and debt problems too much worse, economists said. “New loans are pouring into the real-estate sector,” said Alicia Garcia-Herrero, economist with investment bank Natixis, part of France’s Groupe BPCE. “But the elephant in the room is credit risk.”

The great retreat of Chinese companies from the U.S. stock market is hitting a snag. Concern last week that Chinese regulators may restrict overseas-traded companies from returning home helped erase more than $5 billion in the market value of firms seeking to do so. Shares of companies from Momo to 21Vianet have plunged at least 20% since May 6 amid speculation that the management-led investor groups may back away from the buyout deals or lower their purchase prices. The selloff marks another twist in the saga of U.S.-listed Chinese companies seeking to go private, lured by the prospect of relisting at higher valuations in Shanghai or Shenzhen. More than 40 have received buyout offers worth at least $35 billion since the beginning of 2015.

About three quarters of the deals are still pending, including Qihoo 360, whose $9.3 billion offer is the largest. The unraveling started on May 6 when the China Securities Regulatory Commission said that it’s studying the impact of companies seeking to relist domestically after withdrawing from overseas. The regulators are concerned the valuations estimated for some domestic backdoor listings are too high and could affect the stability of the stock market, according to the people familiar with matter. Policy makers also want to avoid encouraging more buyouts that could prompt capital outflows, the people said.

The one sector Beijing cannot control is the biggest there is. “Pushing on a string” comes to mind. “Interest rates are low, but investment is declining, which shows that the overall market – domestic and overseas market – is not good,” he said.”

Xia Xiaokang and Bruno Chen, who both run private-sector companies, are the sort of businessmen that Chinese leaders are increasingly concerned about as economic growth slows. Beijing is counting on the private sector to invest more in the economy and take up the slack as the government tries to engineer a shift away from largely state-run heavy industry to more entrepreneurial and services-led growth. Unfortunately, just when China needs the private sector to step up, they look to be stepping back. “We plan to downsize our business rather than expand,” said Chen, who runs Ningbo Tengsheng Garments Co in the coastal export hub of Zhejiang province in eastern China. “We cannot feel any improvement in the economy,” he said.

Xia, general manager of Wenzhou Kingsdom Sanitary Ware, some 400 km from Shanghai, similarly lacks confidence in the economy. “We have hardly made any fixed-asset investment since last year and we now plan to rent out part of our factory building because it’s too big,” he said. After March data suggested that economic activity was finally picking up after a long slowdown, April figures released at the weekend suggested otherwise. Overall investment, factory output and retail sales all grew more slowly than expected. Private-sector investment for January to April grew just 5.2%, its weakest pace since the National Bureau of Statistics (NBS) started recording the data in 2012. More worrying, private-sector investment is decelerating sharply from rates near 25% in 2013, to just 10% last year and now just over 5%.

China’s record daily steel output in April bodes ill for an embattled global steel industry already reeling from a deluge of exports from the world’s top producer. Crude steel output over the month rose 0.5% to 69.42 million metric tons from a year earlier, the National Bureau of Statistics said on Saturday. The gains came after mills ramped up production to take advantage of a spurt higher in prices that has given them the best profits this decade. While below March’s record monthly figure of 70.65 million tons, the daily rate of 2.314 million tons was higher due to fewer producing days and surpassed the previous best set in June 2014. “Given how high margins went, we’ve been expecting to see a supply response like this,” Ian Roper at Macquarie said in a WeChat message. “Chinese mills will likely look back to the export market as domestic oversupply reappears.”

China’s overseas sales in the first four months were already running 7.6% higher than a year earlier, piling on the pressure after the nation shipped a record 112 million tons in 2015. Output remaining at such elevated levels “definitely adds to oversupply risks and exports may continue to rise,” said Helen Lau, Hong Kong-based analyst at Argonaut Securities. In a sign that China is recommitting to the reform of its bloated state sector, its top producer, Hebei Iron & Steel, said Friday it’ll cut 5.02 million tons of capacity. That still leaves a way to go. Japan’s biggest mill, Nippon Steel & Sumitomo Metal, also said Friday that it would take control of a smaller domestic steelmaker in a bid to weather a “rapid deterioration of the business environment” caused in part by overcapacity in China of some 400 million tons.

A year ago, we explained the many ways companies make reading their quarterly earnings reports a miserable task. We weren’t just whining. We wanted to remind companies that our readers regularly tell us they struggle to understand earnings announcements, and our job is to decode them for investors. Making that difficult isn’t helping anyone. We noted that some of their tactics – inventing or manipulating numbers, using meaningless jargon, distributing lame executive quotes, and more — can be outright damaging, eroding investor trust and creating skepticism. We hoped they’d change their ways. We’re sorry to say that today, as another earnings season draws to a close, things are even worse.

“Companies are definitely less transparent than they used to be,” said Leigh Drogen, founder and chief executive of Estimize, which crowdsources earnings estimates. They are “using accounting schemes that are more specific to … how they want investors to perceive their results.” Earnings are a crucial quarterly update for investors, as they provide the “best unbiased” view of what’s going on with companies, sectors and the economy, said Karyn Cavanaugh, senior market strategist at Voya Investment Management. “Earnings discount all the noise,” she said. But today, according to FactSet, more than 90% of S&P 500 companies use their own metrics in an attempt to make their numbers look better. Some conceal revenue and other key numbers in hard-to-access tables.

And a recent NYSE rule change has led some companies to report very early in the morning and pushed others to join the posse reporting after the closing bell, creating bottlenecks. While all this has meant more stress for reporters and analysts, it’s also made things harder for everyday investors trying to do due diligence on the companies they own. Experts say more companies seem to be breaking the most fundamental pact they have with their co-owners: to keep them informed of the true state of their business. “It’s a holographic presentation bubble distorting underlying operational reality,” said analyst Nicholas Heymann at William Blair. “Companies are working all the angles.”

As interest rates in Europe fall near or below zero, lawmakers and consumer advocates in Spain and Portugal are attacking an ancient tenet of finance by insisting that lenders can owe money to borrowers. Banks in the two countries, struggling to recover from recessions that shook their financial systems, are fighting back, with billions of dollars in mortgage interest payments potentially at stake. Portugal’s central-bank governor, in a reversal, has rushed to defend the banks against a proposed law that would require them to pay borrowers when interest rates turn negative. Banks in both countries are rewriting new mortgage contracts to warn homeowners that they could never profit from subzero rates.

In Spain and Portugal, banks typically tie interest rates on mortgages to the euro interbank offered rate, or Euribor, a fluctuating rate banks pay to borrow from each other. In addition, interest rates in both countries include a fixed percentage of the loan, called the spread. In much of Europe, by contrast, fixed mortgage rates are common. Euribor began turning negative last year after the ECB cut interest rates below zero—charging lenders to hold deposits—to stimulate the Continent’s economies. That has pulled mortgage rates into negative territory in a few isolated cases in Portugal.

The vast majority of Spanish and Portuguese mortgage holders still pay interest, because Euribor hasn’t dropped enough to wipe out the spreads. But while lenders consider further steep drops unlikely, they are taking steps to protect themselves just in case. Europe already has a precedent: Banks in Denmark are paying thousands of borrowers interest on their home loans, nearly four years after the central bank introduced negative interest rates. Danish banks have increased some fees to compensate but never mounted serious legal objections. In Spain and Portugal, bank executives said they would pay borrowers when pigs fly.

The number of migrants being sent back to Turkey from Greece has fallen well short of EU expectations, prompting fears that a fresh wave of arrivals could overwhelm the Aegean Islands during this summer. Fewer than 400 of the 8,500 people who have arrived on the Greek islands since the March 20 EU deal with Ankara — aimed at reducing migrant flows — have been returned to Turkey, according to figures from the Greek government’s migration co-ordination unit. Instead, Athens has approved more than 30% of the 600 asylum applications from Syrians that have been assessed since March 20, a significantly higher percentage than anticipated, according to European officials and aid workers. While the slow pace of returns will irk many in Brussels, Greek officials say it reflects their own policy on asylum requests.

They dismiss fears that the deal between the EU and Turkey could collapse if the trend continues – leading to a fresh influx – and stress that Greece’s migration laws do not recognise Turkey as a safe third country for refugees. Maria Stavropoulou, a former UN official who heads the Greek asylum service, said: “We fully understand the [EU] concerns but if you look at it from the perspective of the rule of law, it is going exactly as it should. “We have many vulnerable people on the islands … a lot of very sick people. By law they are exempt from the return process.” Epaminondas Farmakis of Solidarity Now, a refugee charity funded by the billionaire investor George Soros, said: “Brussels wants to see group returns but Greece is looking at applications for asylum on a case-by-case basis.”

There is going to be carnage in the casino, and the proof lies in the transcript of Janet Yellen’s press conference. She did not say one word about the real world; it was all about the hypothecated world embedded in the Fed’s tinker toy model of the US economy. Yes, tinker toys are what kids used to play with back in the 1950s and 1960s, and that’s when Janet acquired her school-girl model of the nation’s economy. But since that model is so frightfully primitive, mechanical, incomplete, stylized and obsolete, it tells almost nothing of relevance about where the markets and economy now stand; or what forces are driving them; or where they are headed in the period just ahead. In fact, Yellen’s tinker toy model is so deficient as to confirm that she and her posse are essentially flying blind.

That alone should give investors pause – especially because Yellen confessed explicitly that “monetary policy is an exercise in forecasting”. Accordingly, her answers were riddled with ritualistic reminders about all the dashboards, incoming data and economic system telemetry that the Fed is vigilantly monitoring. But all that minding of everybody else’s business is not a virtue – its proof that Yellen is the ultimate Keynesian catechumen. This stupendously naïve old school marm still believes the received Keynesian scriptures as penned by the 1960s-era apostles James (Tobin), John (Galbraith), Paul (Samuelson) and Walter (Heller). But c’mon.Those ancient texts have no relevance to the debt-saturated, state-dominated, hideously over-capacitated global economy of 2015.

They just convey a stupid little paint-by-the-numbers simulacrum of what a purportedly closed domestic economy looked like even back then. That is, before Richard Nixon had finally destroyed Bretton Woods and turned over the Fed’s printing presses to power aggrandizing PhDs; and before Mr. Deng had thrown out Mao’s little red book in favor of a central bank based credit Ponzi. As you listened to Yellen babble on about the purported cyclical “slack” remaining in the US economy, the current unusually low “natural rate” of federal funds, all the numerous and sundry “transient” factors affecting the outlook, and the Fed’s fetishly literal quest for 2.00% inflation (yes, these fools apparently think the can hit their inflation target to the second decimal place), only one conclusion was possible. To wit, sell the bonds, sell the stocks, sell the house, dread the Fed!

Oil traded below $35 a barrel and headed for a third weekly decline amid a worsening U.S. supply glut and the first interest rate increase by the Federal Reserve in almost a decade. Futures held losses in New York after closing Thursday at the lowest in almost seven years, and were down 2.2% this week. Crude stockpiles surged to 490.7 million barrels, the highest for this time of year since 1930, according to the Energy Information Administration. Goldman Sachs warned of “high risks” that prices may sink further as supplies swell. The Fed decision bolstered the dollar, diminishing the investment appeal of commodities.

Oil is trading near levels last seen during the global financial crisis on signs the surplus will be exacerbated. OPEC abandoned output limits at a Dec. 4 meeting while the White House announced its support Wednesday for a deal reached by congressional leaders that would end the nation’s 40-year restrictions on crude exports. “The major driver this week has been U.S. dollar strength against a backdrop of ongoing refusal to respond rationally to the current market surplus on the supply side,” Michael McCarthy, a chief markets strategist at CMC Markets in Sydney, said by phone. “We’re just not seeing the normal production cuts we’d expect given the plummet in prices.”

Natural-gas fell to the lowest ever inflation-adjusted price in its history of Nymex trading on Wednesday as extremely warm weather continues to limit demand. Prices for the front-month January contract settled down 3.2 cents, or 1.8%, at $1.79 a million British thermal units on the New York Mercantile Exchange. That is the lowest settlement since March 24, 1999. Gas prices have been falling precipitously in recent weeks because of the combination of record-high stockpiles and a December that could be the worst for heating demand in history. Prices have fallen 25% in just one month and have dropped 39% from their high in August. Wednesday settlement put gas below the inflation-adjusted low of $1.801 that had been in place since January 1992.

Gas did make a move up to small gains in after-hours trading, but many traders and brokers had little explanation for that rebound. The trader Marc Kerrest said he noticed prices and spreads moving higher for months far away, a sign front-month prices could follow. He closed out some of his bearish bets before settlement, he said. “But in no way would I consider going [bullish on] gas just because of what it’s done,” in recent weeks, said Mr. Kerrest, who manages his own gas-focused fund, Cornice Trading. Warm weather in the U.S. caused by the El Niño weather phenomenon has sharply limited demand for the heating fuel this year. The natural-gas market is oversupplied, and some traders and analysts say the industry could run out of storage space for gas by mid-2016.

Production was so high and demand was so soft that storage levels likely shrank by just 41 billion cubic feet last week, according to the average forecast of 17 analysts, brokers and traders surveyed by The Wall Street Journal. That is only a third of their five-year average drawdown for the week. If the forecast is correct, stockpiles on Dec. 11 would have been 16% above levels from a year ago and 8.9% above the five-year average for the same week.

An obscure metal used to make steel has become this year’s worst-performing commodity, after China’s stumbling economy and a collapse in the energy industry drove outsized losses. Molybdenum – that’s mo.lyb.de.num for the uninitiated – is used in many steel building materials and to help harden the drills used to extract oil and natural gas from deep underground. Prices plunged 49%, the most among 79 raw materials tracked by Bloomberg, as the white metal was undermined by the flagging demand and oversupply that plagued global commodity markets throughout 2015. Use of the metal tumbled 5.1% this year, the biggest contraction since 2009, driven by a slowdown in China, the world’s biggest metals and energy consumer, according to Macquarie.

Prices have dropped for eight straight months, the longest slump since 2011, weighing on returns for mining companies including Freeport-McMoRan Inc., the world’s top producer. “It’s like a poster child for the commodity bear market,” said Paul Christopher atWells Fargo Investment Institute. “We don’t have a positive outlook on metals, including molybdenum, because they’ve been overproduced. They will continue to do the worst, not just because China’s demand is slipping still, but also because there’s not been enough supply adjustment.” Prices for molybdenum oxide tumbled to a 12-year low of $4.616 a pound in November, according to monthly data from Metal Bulletin. The drop exceeded the 34% decline for crude oil and the 27% slide in the Bloomberg Commodity Index, a gauge of returns from 22 items that is headed for its biggest annual decline since the recession in 2008.

Molybdenum for immediate delivery traded on the London Metal Exchange slumped 43% this year to $11,628 a metric ton ($5.27 a pound). About half of molybdenum is produced as a byproduct of extracting other metals, mainly copper. Because it makes up a small portion of revenue for mining companies, suppliers are slower to respond with output cuts when prices tumble, said Mu Li at CPM Group in New York. Production topped demand by 40.9 million pounds in 2015, the biggest surplus since at least 2002, according to Bank of America. The market will remain oversupplied through 2020, the bank estimates.

If you want to know how China’s economy is doing, take a slow boat from one of its ports. Even with fuel at its cheapest price in almost a decade, the ships that carry goods around the world have been reducing speed in line with the slowdown in China, the biggest exporter. Shipping companies have been “slow steaming” since the global financial crisis in 2008, as a way to save costs and keep as many ships active as possible. Vessels are now operating at an average of 9.69 knots, compared with 13.06 knots seven years ago, according to data compiled by Bloomberg. That means Nike sneakers and Barbie dolls made in China can now take two weeks to arrive in Los Angeles and a month to reach Le Havre, France – a week longer than if the ships were moving at full speed.

And there’s scope for ships to go even slower, according to A.P. Moeller-Maersk. “This is the new norm,” said Rahul Kapoor at Drewry Maritime Services. “The overall speed of the industry has gone down and there’s no going back.” In the boom years before the 2008 financial crisis, shipping lines expanded fleets and ran ships as fast as they could to keep up with the surging demand for goods manufactured half a world away. As demand dropped, the lines were left with too many vessels, and customers eager to reduce inventory, who would rather pay a lower rate to receive goods than guarantee quick delivery. “In 2003, if you were on a tanker, container ships would zoom past and in a matter of a few minutes you couldn’t see them on the horizon,” Kapoor said.

“Since 2008, it’s been a different story.” Fuel costs are the biggest expense for shipping lines and the drop in oil has given them some relief from plunging freight rates driven lower by overcapacity and sluggish global growth. Reducing a ship’s speed by 10% can cut fuel consumption by as much as 30%, according to ship assessor Det Norske Veritas.

The global policy graveyard is littered with central bankers who raised interest rates too soon, only to retreat after tipping their economies back into recession or after having misjudged the powerful deflationary forces in the post-Lehman world. The European Central Bank raised rates twice in 2011, before the economy had achieved “escape velocity” and just as the Club Med states embarked on drastic fiscal austerity. The result was the near-collapse of monetary union. Sweden, Denmark, Korea, Canada, Australia, New Zealand, Israel and Chile, among others, were all forced to reverse course, and some have since swung into negative territory to compensate for the damage. The US Federal Reserve has waited longer before pulling the trigger, and circumstances are, in many ways, more propitious.

Four years of budget cuts and fiscal drag are finally over. State and local spending will add stimulus worth 0.5pc of GDP this year. The unemployment rate has dropped to 5pc. Payrolls have risen by 509,000 over the past two months. The rate of job openings is the highest since the peak of the dotcom boom in 2000. The M1 and M2 money supply figures have switched from green to amber but are not flashing the sort of stress warnings so clearly visible in mid-2008. Yet it is a very murky picture. This is the first time the Fed has ever embarked on tightening cycle when the ISM gauge of manufacturing is below the boom-bust line of 50. Nominal GDP growth in the US has been trending down from 5pc in mid-2014 to barely 3pc. Danny Blanchflower, a Dartmouth professor and a former UK rate-setter, said the US labour market is not as tight as it looks.

Inflation is nowhere near its 2pc target and the world economy is still gasping for air. He sees a 50/50 chance that the Fed will have to pirouette and go back to the drawing board. “All it will take is one shock,” said Lars Christensen, from Markets and Money Advisory. “It is really weird that they are raising rates at all. Capacity utilization in industry has been falling for five months.” Mr Christensen said the rate rise in itself is relatively harmless. The real tightening kicked off two years ago when the Fed began to slow its $85bn of bond purchases each month. This squeezed liquidity through the classic quantity of money effect. Fed tapering slowly turned off the spigot for a global financial system running on a “dollar standard”, with an estimated $9 trillion of foreign debt in US currency.

China imported US tightening through its dollar-peg, compounding the slowdown already under way. It was the delayed effect of this crunch that has caused the “broad” dollar index to rocket by 19pc since July 2014, the steepest dollar rise in modern times. It is a key cause of the bloodbath for commodities and emerging markets. Mr Christensen said the saving grace this time is that Fed has given clear assurances – like the Bank of England – that it will roll over its $4.5 trillion balance sheet for a long time to come, rather than winding back quantitative easing and risking monetary contraction.

The Federal Reserve raised the interbank borrowing rate today by one quarter of one% or 25 basis points. Readers are asking, “what does that mean?” It means that the Fed has had time to figure out that the effect of the small “rate hike” would essentially be zero. In other words, the small increase in the target rate from a range of 0 to 0.25% to 0.25 to 0.50% is insufficient to set off problems in the interest-rate derivatives market or to send stock and bond prices into decline. Prior to today’s Fed announcement, the interbank borrowing rate was averaging 0.13% over the period since the beginning of Quantitative Easing. In other words, there has not been enough demand from banks for the available liquidity to push the rate up to the 0.25% limit.

Similarly, after today’s announced “rate hike,” the rate might settle at 0.25%, the max of the previous rate and the bottom range of the new rate. However, the fact of the matter is that the available liquidity exceeded demand in the old rate range. The purpose of raising interest rates is to choke off credit demand, but there was no need to choke off credit demand when the demand for credit was only sufficient to keep the average rate in the midpoint of the old range. This “rate hike” is a fraud. It is only for the idiots in the financial media who have been going on about a rate hike forever and the need for the Fed to protect its credibility by raising interest rates.

Look at it this way. The banking system as a whole does not need to borrow as it is sitting on $2.42 trillion in excess reserves. The negative impact of the “rate hike” affects only smaller banks that are lending to businesses and consumers. If these banks find themselves fully loaned up and in need of overnight reserves to meet their reserve requirements, they will need to borrow from a bank with excess reserves. Thus, the rate hike has the effect of making smaller banks pay higher interest expense to the mega-banks favored by the Federal Reserve. A different way of putting it is that the “rate hike” favors banks sitting on excess reserves over banks who are lending to businesses and consumers in their community. In other words, the rate hike just facilitates more looting by the One%.

Japan’s cabinet is set to approve on Friday an extra budget worth $27 billion to fund stimulus spending for the current fiscal year ending in March to rev up the flagging economy, government sources told Reuters. The 3.3213 trillion yen ($27.14 billion) extra stimulus budget includes spending for steps to support elderly pensioners with cash benefits and farmers seen hit by the Trans-Pacific Partnership (TPP) trade deal, the sources said on condition of anonymity because the plan has not been finalised. In a show of efforts to fix dire public finances, the government will fund the stimulus without resorting to fresh borrowing, while tapping cash reserves left from the previous year’s budget and higher-than-expected tax revenue, they said.

These funding sources will allow the government to reduce its plans to issue new bonds by 444.7 billion yen from the initially planned 36.9 trillion yen, they said. The government revised up the tax revenue estimate for this fiscal year by 1.899 trillion yen to a 24-year high of 56.4 trillion yen, reflecting increase in corporate tax payments on the back of rising profits. Non-tax revenue was cut by 346.6 billion yen from an initial estimate of 4.95 trillion yen, due to expected cuts in the Bank of Japan’s payment into the government’s coffers because of the bank’s plan to replenish its reserves. The extra budget will be sent to parliament for approval early next year, along with an annual budget for the coming fiscal year that starts in April.

Having already investigated investors and brokerages in connection with a bungled summer stock-market rescue totaling more than $200 billion, Beijing is now probing the rescuers. Communist Party graft busters are investigating whether officials inside the China Securities Regulatory Commission used their knowledge of the rescue effort to enrich their friends or themselves, say agency officials familiar with the probe. In recent weeks, they have been taking officials, one by one, to a hotel close to the agency’s headquarters to press them to come clean or report on others, the officials say. The investigators also have set up shop on the top floor of the agency’s 22-story headquarters in downtown Beijing, banned agency officials from leaving China and set up a hotline and red mailbox in the lobby for anonymous tips, the officials say.

Already two top CSRC officials have been removed from their posts and placed under investigation on suspicion of leaking the government’s moves to private investors who used it to reap profits, according to officials with knowledge of the probe. The officials familiar with the probe told The Wall Street Journal that one focus is suspected chummy ties between the regulators and those they regulate. “They’re trying to determine what went wrong with the action to save the market this summer,” one of the officials said. “Was there anyone who inappropriately profited from the action?” [..]

The investigation was sparked by a stock-market rescue effort that called into question China’s ability to manage a market-driven economy, a stated national goal. That effort included a massive government-led buying binge, with a state lender plowing 1.2 trillion yuan ($188 billion) into the stock market and brokerages vowing to spend 120 billion yuan more, while other state-backed companies spent an undisclosed amount. Chinese officials have said those unprecedented measures were necessary to preventing the stock rout from spreading to other parts of China’s financial system.

China’s economic conditions deteriorated across the board in the fourth quarter, according to a private survey from a New York-based research group that contrasted with recent official indicators that signaled some stabilization in the country’s slowdown. National sales revenue, volumes, output, prices, profits, hiring, borrowing, and capital expenditure were all weaker than the prior three months, according to the fourth-quarter China Beige Book, published by CBB International. The indicator is modeled on the survey compiled by the Federal Reserve on the U.S. economy, and was first published in 2012. The world’s second-largest economy lacks the kind of comprehensive data available on developed nations, making it harder for investors to get a clear read – particularly as China transitions from reliance on manufacturing and investment toward services and consumption.

Official data on industrial production, retail sales and fixed-asset investment all exceeded forecasts for November, while consumer inflation perked up and a slide in imports moderated. The Beige Book’s profit reading is “particularly disturbing,” with the share of firms reporting earnings gains slipping to the lowest level recorded, CBB President Leland Miller wrote in the release. While retail and real estate held up reasonably well, manufacturing and services performed poorly, with revenues, employment, capital expenditure and profits weakening. The survey shows “pervasive weakness,” Miller wrote in the report. “The popular rush to find a successful manufacturing-to-services transition will have to be put on hold for a bit. Only the part about struggling manufacturing held true.”

After efforts including six interest-rate cuts since late 2014 failed to revive growth, policy makers are switching focus to fix problems like overcapacity on the supply side. President Xi Jinping – seeking to keep growth at a minimum 6.5% a year through 2020 – is juggling short-term stimulus with long-term prescriptions to avoid the middle-income trap that has ensnared developing nations after bouts of rapid growth before they became wealthy. China’s leaders convene their annual economic work meeting Friday, according to the People’s Daily. Officials typically set the growth target for the coming year at the conference, which lasts a few days.

IMF Managing Director Christine Lagarde will be tried for “negligence” in relation to a settlement the French government reached with businessman Bernard Tapie during her time as finance minister, a French court said Thursday. Lagarde, 59, has repeatedly denied wrongdoing and will appeal the decision to put her on trial, her lawyer said. The decision was made by a special commission of the court against the advice of the prosecutor, a court official said. The trial concerns Lagarde’s 2008 decision to allow an arbitration process to end a dispute between Tapie, a supporter of then-French President Nicolas Sarkozy, and former state-owned bank Credit Lyonnais. The court has been looking into whether she erred in agreeing to the arbitration, which resulted in the tycoon being awarded about €403 million.

Having to face trial in France could have serious implications for Lagarde’s future at the helm of the IMF, though her job may not be in any immediate danger. Her five-year term as managing director expires in July. At the fund’s annual meeting in Lima in October, Lagarde said she’d be open to serving another term. “I assume this would probably go quickly, if only to remove the cloud of suspicion over her,” said Christopher Mesnooh, a Paris-based lawyer at Field Fisher Waterhouse, who isn’t involved in the Lagarde case. “Everyone knows the importance of Christine Lagarde to the world economy. They won’t want to leave this unresolved.”

Lagarde reaffirms that she “acted in the best interest of the French State and in full compliance with the law,” according to an e-mailed statement from her attorney Yves Repiquet. “She shares the prosecutors’ view that there is no basis for any charge against her.” The IMF board said Thursday that it sees Lagarde as still able to do her job. “The Executive Board continues to express its confidence in the managing director’s ability to effectively carry out her duties,” IMF spokesman Gerry Rice said in an e-mailed statement. “The board will continue to be briefed on this matter.”

The IMF acknowledged that it made mistakes and omissions in the Greek bailout program approved in May 2010, as it did not include debt restructuring. The IMF Board of Directors approved the evaluation report on the programs during the economic crisis. An independent committee will examine the issue, especially on debt restructuring, which, as highlighted on the report, multiplied difficulties in Greece. According to a Mega television report, the Board expects the report of the Independent Office Fund Evaluation on the role played by its members on the Eurozone crisis. However, the report will be delayed at the request of Poul Thomsen, on the grounds that “the program is still running.”

Regarding the restructuring of the Greek debt, the report states that there was no restructuring because of the fear that the crisis would spread to other Eurozone countries. There was also the fear of exposure of European banks to the Greek debt. Only when the ECB intervened to protect the Eurozone and two years of uncertainty passed, then the Eurozone was secure, the report says. When it was decided to restructure private debt (PSI) the “haircut” was great for the creditors compared to others, but at the same time chances that it would prove insufficient to restore debt sustainability were increased, the report says, according to Mega.

Regarding restructuring of the Greek debt, it is implicitly admitted in the report that it was absolutely necessary in 2010. It is also admitted that for the 2010 and 2012 programs, internal devaluation through reforms in labor and product markets was the main goal. To this end, they decided measures such as reducing nominal wages and benefits in the public sector, reducing minimum wages, the reform of the collective bargaining system, promoting privatization, reducing bureaucracy and promoting competition.

China’s capital city issued a “red alert” for pollution on Friday, hard on the heels of its first-ever such warning earlier in December, as Beijing’s leadership vowed to crack down on often hazardous levels of smog. Authorities in the Chinese capital warned the city would be shrouded by heavy pollution from Saturday until next Tuesday, prompting the highest-level warning that leads to emergency responses such as limiting car use and closing schools. After decades of unbridled economic growth, China’s leadership has vowed to tackle heavy air, water and soil pollution, including the thick smog that often blankets major cities. Beijing’s second red alert comes after a landmark climate agreement was reached in Paris in December, setting a course to move away from a fossil fuel-driven economy within decades in a bid to arrest global warming.

The city’s first red alert was issued on 7 December, restricting traffic and halting outdoor construction. The Beijing Meteorological Service said in a statement vehicle use would be severely restricted, and that fireworks and outdoor barbecues would be banned. It also recommended schools cancel classes. City residents have previously criticised authorities for being too slow to issue red alerts for heavy smog, which often exceeds hazardous levels on pollution indices. The environmental protection minister, Chen Jining, vowed in December to punish agencies and officials for any failure to implement a pollution emergency response plan quickly, the state-run Global Times tabloid said. Many cities around China suffer high levels of pollution, with Shanghai schools banning outdoor activities and authorities limiting work at construction sites and factories earlier this week.

EU leaders meeting in Brussels on Thursday pressed Turkey to curb the flow of migrants entering the bloc via Greece and urged Athens to speed up its efforts to accommodate and repatriate migrants. Prime Minister Alexis Tsipras met his Turkish counterpart Ahmet Davutoglu on the sidelines of the mini-summit in Brussels which brought together 11 EU leaders and Davutoglu. According to sources, Tsipras urged European officials to ensure that a recent agreement between the EU and Turkey to stem migrant flows is being observed. Tsipras repeated Greece’s position that refugees should be transferred directly from Turkey to other EU member-states. But, according to sources, several EU leaders made it clear to Davutoglu that refugee relocations from Turkey would not begun until Ankara makes good on commitments to the EU to curb the flow of migrants to the EU via Greece.

Turkey was not the only country to come under pressure at the summit, which is to continue on Friday. Greece was criticized, chiefly by German Chancellor Angela Merkel, for delays in completing a series of screening centers for migrants on Aegean islands, dubbed hot spots. Merkel also complained about the slow rate of repatriations of migrants from Greece. Tsipras countered that Greek authorities face problems in returning migrants to countries such as Pakistan where authorities are not always cooperative. As for a proposal for the creation of an EU border force with stronger powers, the majority of leaders present, including Tsipras, backed the idea in principle. The leaders of Hungary, Malta and Poland were the most cautious while Tsipras insisted that any upgraded border force should not compromise national sovereignty. Meanwhile back in Athens, Greek authorities continued their efforts to accommodate hundreds of migrants in temporary accommodation centers.

But many appeared reluctant to stay in the designated facilities. Of some 1,300 migrants who have been staying in the Tae Kwo Do Stadium in Palaio Faliro, only 235 were at the old Olympic hockey venue in nearby Elliniko following a relocation on Thursday night. It is unclear where the rest of the migrants went though large numbers have been gathering in squares in central Athens since the Former Yugoslav Republic of Macedonia tightened its border with Greece. Athens Mayor Giorgos Kaminis on Thursday expressed concern at the presence of thousands of migrants who do not merit refugee status, from countries such as Morocco, Algeria and Pakistan, stuck in the capital and other Greek cities. “We do not want these people to be wandering around unable to survive, with no prospects,” he said, adding that he had called on authorities to make use of abandoned military facilities as temporary accommodation.

EU leaders have pledged to fast-track the establishment of an EU border and coast guard force. At a summit in Brussels, they last night urged each other to implement measures agreed this year to curb migration across the Mediterranean. By the middle of next year, they decided, they would agree the details of the new border force which was proposed by the EU executive earlier this week. Some leaders, including Greek PM Alexis Tsipras, made clear, however, that they wanted to strike out a controversial element of the proposal which would give Brussels power to send in EU border guards without a country’s consent. Summing up the three-hour discussion, European Council President Donald Tusk, said leaders had agreed there was a “delivery deficit” in making good on a series of measures agreed over recent months to stem chaotic movements that have put Europe’s Schengen open-borders area in jeopardy.

“Over the past months, the European Council has developed a strategy aimed at stemming the unprecedented migratory flows Europe is facing,” the final agreement read. “However, implementation is insufficient and has to be speeded up. “For the integrity of Schengen to be safeguarded it is indispensable to regain control over the external borders.” Greece and Italy are under pressure to do more to manage and identify those arriving, a million or more so far this year, while governments in general have yet to make good on promises to help take in asylum seekers and deport unwanted migrants. There are only two fully operational “hotspots” for screening of migrants arriving to Italy and Greece from 11 that are supposed to be set up.

Greece risks becoming a vast holding pen for tens of thousands of migrants arriving by boat from Turkey as neighbouring countries close their borders, prime minister Alexis Tsipras has warned. Mr Tsipras also expressed frustration with plans to create a new EU border force that could be deployed to the bloc’s external borders even against the objections of the relevant national government. “Greece stands accused of not being able to protect its border but they [other EU countries] don’t tell us what they expect us to do,” Mr Tsipras told the FT. “We have to rescue people in danger of losing their lives [at sea crossing from Turkey]. If they want us to carry out pushbacks, they must say so,” he added.

He was speaking as the European Commission unveiled its proposal for the new border force, which is widely viewed as a means to address a porous Greek frontier that has become an entry point for hundreds of thousands of migrants seeking to reach Germany and other, more prosperous parts of the EU. Greece only reluctantly accepted 400 officials from the EU’s current border agency, Frontex, to help police its frontier with Macedonia, and the issue of sovereignty cuts deep in a nation that has lost control of much of its economic policymaking as a consequence of its international bailouts. Crossings to Greece’s eastern islands have slowed somewhat of late – possibly because of bad weather – but still averaged about 3,400 per day this month.

According to a EU report on Turkey’s efforts to stem the flow, sent to national capitals on Wednesday, Brussels remains unconvinced the reduction was owing to any new efforts by Ankara following a pledge last month to crack down in exchange for €3bn in EU aid. The report comes ahead of a meeting between Turkey’s prime minister and a group of EU prime ministers on the sidelines of a two-day Brussels summit. That meeting, hosted by Austria and including Mr Tsipras and Angela Merkel, the German chancellor, concerns a voluntary programme in which refugees currently in Turkey would be resettled among willing member states. While Berlin had hoped the scheme would total as many as 500,000 refugees, it is likely to include only about 50,000, according to estimates from officials involved in the talks. They also made clear the scheme will not go ahead unless Turkey manages to cut the number of people entering Europe.

Athens has become increasingly concerned that it will be stuck in the middle – with Ankara failing to stop the influx and countries to the north blocking those migrants they believe are motivated by economic despair and therefore would not qualify as war refugees. For the past four weeks, only migrants fleeing wars and violence in Syria, Iraq and Afghanistan have been allowed to cross Greece’s northern border into Macedonia and continue the journey to central Europe. “Greece is in danger of becoming a black box [for refugees] if these flows don’t decrease,” Mr Tsipras said. “Slovenia, Croatia, the former Yugoslav Republic of Macedonia, all took the decision to filter people by nationality, for example, not accepting those from north African countries and Iran. This is not correct,” he added.

December has been a bruising month for bond traders and we’re only four days in. The value of the U.S. fixed-income market slid by $162.5 billion on Thursday while the euro area’s shrank by the equivalent of $107.5 billion as a smaller-than-expected stimulus boost by the European Central Bank and hawkish comments from Janet Yellen pushed up yields around the world. A global index of bonds compiled by Bank of America Merrill Lynch slumped the most since June 2013. The ECB led by President Mario Draghi increased its bond-buying program by at least €360 billion and cut the deposit rate by 10 basis points at a policy meeting Thursday but the package fell short of the amount many economists had predicted.

Fed Chair Yellen told Congress U.S. household spending had been “particularly solid in 2015,” and car sales were strong, backing the case for the central bank to raise interest rates this month for the first time in almost a decade.”A lot of people lost money,” said Charles Comiskey at Bank of Nova Scotia, one of the 22 primary dealers obligated to bid at U.S. debt sales. “People were caught in those trades. In the old days, this would have been a one-week trade. In the new world, and in the less liquid market we live in today, it takes one day for the repricing.” The bond rout on Thursday added weight to warnings from Franklin Templeton’s Michael Hasenstab that there is a “a lot of pain” to come as rising U.S. interest rates disrupts complacency in the debt market.

“A lot of investors have gotten very complacent and comfortable with the idea that there’s global deflation and you can go long rates forever,” Hasenstab, whose Templeton Global Bond Fund sits atop Morningstar Inc.’s 10-year performance ranking, said this week. “When that reverses, there will be a lot of pain in many of the bond markets.”

More than $1tn in US corporate debt has been downgraded this year as defaults climb to post-crisis highs, underlining investor fears that the credit cycle has entered its final innings. The figures, which will be lifted by downgrades on Wednesday evening that stripped four of the largest US banks of coveted A level ratings, have unnerved credit investors already skittish from a pop in volatility and sharp swings in bond prices. Analysts with Standard & Poor’s, Moody’s and Fitch expect default rates to increase over the next 12 months, an inopportune time for Federal Reserve policymakers, who are expected to begin to tighten monetary policy in the coming weeks. S&P has cut its ratings on US bonds worth $1.04tn in the first 11 months of the year, a 72% jump from the entirety of 2014.

In contrast, upgrades have fallen to less than half a billion dollars, more than a third below last year’s total. The rating agency has more than 300 US companies on review for downgrade, twice the number of groups its analysts have identified for potential upgrade. “The credit cycle is long in the tooth by any standardised measure,” Bonnie Baha at DoubleLine Capital said. “The Fed’s quantitative easing programme helped to defer a default cycle and with the Fed poised to increase rates, that may be about to change.” Much of the decline in fundamentals has been linked to the significant slide in commodity prices, with failures in the energy and metals and mining industries making up a material part of the defaults recorded thus far, Diane Vazza, an analyst with S&P, said. “Those companies have been hit hard and will continue to be hit hard,” Ms Vazza noted. “Oil and gas is a third of distressed credits, that’s going to continue to be weak.”

Some 102 companies have defaulted since the year’s start, including 63 in the US. Only three companies in the country have retained a coveted triple A rating: ExxonMobil, Johnson & Johnson and Microsoft, with the oil major on review for possible downgrade. Portfolio managers and credit desks have already begun to push back at offerings seen as too risky as they continue a flight to quality. Bankers have had to offer steep discounts on several junk bond deals to fill order books, and some were caught off guard when Vodafone, the investment grade UK telecoms group, had to pull a debt sale after investors demanded greater protections. Bond prices, in turn, have slid. The yield on the Merrill Lynch high-yield US bond index, which moves inversely to its price, has shifted back up above 8%. For the lowest rung triple-C and lower rated groups, yields have hit their highest levels in six years.

David Cameron’s push to rebrand the EU as a “multicurrency union” has triggered high-level concerns at the European Central Bank, which fears it could give countries such as Poland an excuse to stay out of the euro. The UK prime minister wants to rewrite the EU treaty to clarify that some countries will never join the single currency, in an attempt to ensure they do not face discrimination by countries inside the eurozone. Mario Draghi, president of the ECB, is worried the move could weaken the commitment of some countries to join the euro. Beata Szydlo, the new Polish premier, has previously described the euro as a “bad idea” that would make Poland “a second Greece”.

Mr Draghi shares concerns in Brussels that the EU single market could be permanently divided across two regulatory spheres, with eurozone countries facing unfair competition if there were a lighter-touch regime on the outside. The idea of rebranding the EU as a “multicurrency union” was raised during a recent meeting in London between George Osborne, the UK chancellor, and Mr Draghi. Mr Osborne said last month that Britain wanted the treaty to recognise “that the EU has more than one currency”. Under the existing treaty, the euro is the official currency of the EU and every member state is obliged to join — apart from Britain and Denmark, which have opt-outs. The common currency is used by 19 out of 28 member states.

Sluggish growth and a debt crisis have made the euro a less-attractive proposition in recent years, and Mr Draghi’s concern is that a formal recognition that the EU is a “multicurrency union” could make matters worse. “He’s worried that people would resist harmonisation by arguing that the UK and others were gaining an unfair advantage,” said a British official. The ECB said the bank had no formal position on the issue. British ministers are confident that the ECB’s concerns can be addressed, possibly with a treaty clause making clear that every EU member apart from Britain and Denmark is still expected to join the euro.

One official involved in the British EU renegotiations said that any safeguards for Britain must not “permanently divide the ins and outs” or force countries to pick camps. “Whatever we do cannot impair the euro in any way. The single currency must be able to function,” the official said. Since the launch of the single currency in 1999, the ECB has consistently argued that a single market and currency must have common governance and institutions. One European adviser familiar with Mr Draghi’s views said: “Eurozone countries won’t want to give a competitive advantage to those outside and will use it as an excuse. That is what worries him.”

I have been warning that government can do whatever it likes and declare anything to be be a criminal act. In the USA, not paying taxes is NOT a crime, failing to file your income tax is the crime. The EU has imposed the first outright total asset reporting requirement for cash, jewelry, and anything else you have of value stored away. As of January 1st, 2016, ALL GREEKS must report their personal cash holdings, whatever jewelry they possess, and the contents of their storage facilities under penalty of criminal prosecution. The dictatorship of the Troika has demanded that Greeks will be the first to have to report all personal assets.

Why the Greek government has NOT exited the Eurozone is just insanity. The Greek government has betrayed its own people to Brussels. The Troika will shake every Greek upside down until they rob every personal asset they have. Greeks are just the first test case. All Greeks must declare cash over € 15,000, jewelry worth more than 30,000 euros and the contents of their storage lockers/facilities. This is a decree of the Department of Justice and the Ministry of Finance meaning if you do not comply, it will become criminal. The Troika is out of its mind. They are destroying Europe and this is the very type of action by governments that has resulted in revolutions.

The Greek government has betrayed its own people and they are placing at risk the viability of Europe to even survive as a economic union. The Troika is UNELECTED and does NOT have to answer to the people. It has converted a democratic Europe into the Soviet Union of Europe. The Greek people are being stripped of their assets for the corruption of politicians. This is the test run. Everyone else will be treated the same. Just how much longer can the EU remain together?

Mario Draghi has said the European Central Bank would intensify efforts to support the eurozone economy and boost inflation toward its 2pc goal if necessary. Speaking a day after the ECB’s moves to expand stimulus fell short of market expectations, the central bank president said that he was confident of returning to that level of inflation “without undue delay”. “But there is no doubt that if we had to intensify the use of our instruments to ensure that we achieve our price stability mandate, we would,” he said in a speech to the Economic Club of New York. “There cannot be any limit to how far we are willing to deploy our instruments, within our mandate, and to achieve our mandate,” he said.

On Thursday the ECB sent equity markets tumbling, and reversed the euro’s downward course, after it announced an interest rate cut that was less than investors had expected and held back from expanding the size of its bond-buying stimulus. The bank cut its key deposit rate by a modest 0.10 percentage points to -0.3pc, and only extended the length of its bond purchase program by six months to March 2017. Critics said that was not strong enough action to counter deflationary pressures on the euro area economy. Some analysts believed a desire for stronger moves, like an expansion of bond purchases, was stymied by powerful, more conservative members of the ECB governing council, including Bundesbank chief Jens Weidmann.

But Mr Draghi insisted that there was “very broad agreement” within the council for the extent of the bank’s actions. And, he added, it would do more if necessary: “There is no particular limit to how we can deploy any of our tools.” He acknowledged some market doubts that central banks are proving unable to reverse the downward trend in inflation, saying that, even if there is a lag to the impact of policies in place, they are working. “I would dispute entirely the notion that we are powerless to reach our objective,” he said. “The evidence at our disposal shows, on the contrary, that the instruments we are currently deploying are having the effect intended.” Without them, he added, “inflation would likely have been negative this year”.

U.S. securities regulators, under pressure to demonstrate they have a handle on potential risks in the asset-management industry, are about to crack down on the use of derivatives in certain funds sold to the public, worried that some products are too precarious for retail investors. The restrictions, which the Securities and Exchange Commission is set to propose next Friday, are expected to have an outsize effect on a small but growing sector that uses the complex instruments to try to deliver double or even triple returns of the indexes they track. Some regulators say these products—known as “leveraged exchange-traded funds”—can be highly volatile, and expose investors to sudden, outsize losses.

The proposed restrictions could adversely affect in particular firms like ProShare Advisors, a midsize fund company that has carved out a niche role as a leading leveraged-ETF provider. The Bethesda, Md., firm is mounting a behind-the-scenes campaign to persuade the SEC to scale back the proposal, arguing that regulators’ concerns are overblown, according to people familiar with the firms’ thinking. Exchange-traded funds hold a basket of assets like mutual funds and trade on an exchange like a stock. At issue is the growing use by some ETFs of derivatives, contracts that permit investors to speculate on underlying assets—such as commodity prices—and to amplify the potential gains through leverage, or borrowed money. But those derivatives also raise the riskiness of those investments, and can also magnify the losses.

SEC officials have said the increasing use of derivatives by mutual funds to boost leverage warrants heightened scrutiny, saying that the agency’s existing investor protection rules haven’t kept pace with industry practices. Some of the existing guidance goes back more than 30 years, long before the advent of modern derivatives.

U.S. regulators are examining whether banks colluded in setting prices in the derivatives market where investors speculate on credit risk, according to a person with knowledge of the matter. The U.S. Securities and Exchange Commission is probing whether firms acted in unison to distort prices in the $6 trillion market for credit-default swaps indexes, said the person, who asked not to be identified because the investigation is private. The regulator is trying to determine if dealers have misrepresented index prices, the person said. The credit-default swaps benchmarks allow investors to make bets on the likelihood of default by companies, countries or securities backed by mortgages. The probe comes after successful cases brought against Wall Street’s illegal practices tied to interest rates and foreign currencies.

Those cases showed traders misrepresented prices and coordinated their positions to push valuations in their favor, often through chat rooms – practices that violate antitrust laws. The government has used those prosecutions as a road map to pursue similar conduct in different markets. Credit-default swaps, which gained notoriety during the financial crisis for amplifying losses and spreading risks from the U.S. housing bust across the globe, have since come under more scrutiny by regulators. Trading in swaps index contracts has increased in recent years as investors look for easy ways to speculate on, say, the health of U.S. companies, or the risk that defaults will increase as seven years of easy-money policies come to an end.

Toward the end of each trading day, benchmark prices for indexes are tabulated by third-party providers based on dealer quotes, creating a level at which traders can mark their positions. This process is similar to how other markets that don’t trade on exchanges set benchmark prices. That includes the London interbank offered rate, an interest-rate benchmark. In the Libor scandal, regulators accused banks of making submissions on borrowing rates that benefited their trading positions. A group of Wall Street’s biggest banks have traditionally dominated trading in the credit swaps, acting as market makers to hedge funds, insurance companies and other institutional investors. Those dealers send quotes to clients over e-mails or on electronic screens showing at which price they will buy or sell default insurance. Those values rise and fall as the perception of credit risk changes.

Colonialism is one of those things you’re not supposed to discuss in polite company – at least not north of the Mediterranean. Most people feel uncomfortable about it, and would rather pretend it didn’t happen. In fact, that appears to be the official position. In the mainstream narrative of international development peddled by institutions from the World Bank to the UK’s Department of International Development, the history of colonialism is routinely erased. According to the official story, developing countries are poor because of their own internal problems, while western countries are rich because they worked hard, and upheld the right values and policies. And because the west happens to be further ahead, its countries generously reach out across the chasm to give “aid” to the rest – just a little something to help them along.

If colonialism is ever acknowledged, it’s to say that it was not a crime, but rather a benefit to the colonised – a leg up the development ladder. But the historical record tells a very different story, and that opens up difficult questions about another topic that Europeans prefer to avoid: reparations. No matter how much they try, however, this topic resurfaces over and over again. Recently, after a debate at the Oxford Union, Indian MP Shashi Tharoor’s powerful case for reparations went viral, attracting more than 3 million views on YouTube. Clearly the issue is hitting a nerve. The reparations debate is threatening because it completely upends the usual narrative of development. It suggests that poverty in the global south is not a natural phenomenon, but has been actively created. And it casts western countries in the role not of benefactors, but of plunderers.

When it comes to the colonial legacy, some of the facts are almost too shocking to comprehend. When Europeans arrived in what is now Latin America in 1492, the region may have been inhabited by between 50 million and 100 million indigenous people. By the mid 1600s, their population was slashed to about 3.5 million. The vast majority succumbed to foreign disease and many were slaughtered, died of slavery or starved to death after being kicked off their land. It was like the holocaust seven times over. What were the Europeans after? Silver was a big part of it. Between 1503 and 1660, 16m kilograms of silver were shipped to Europe, amounting to three times the total European reserves of the metal. By the early 1800s, a total of 100m kg of silver had been drained from the veins of Latin America and pumped into the European economy, providing much of the capital for the industrial revolution.

To get a sense for the scale of this wealth, consider this thought experiment: if 100m kg of silver was invested in 1800 at 5% interest – the historical average – it would amount to £110trn ($165trn) today. An unimaginable sum. Europeans slaked their need for labour in the colonies – in the mines and on the plantations – not only by enslaving indigenous Americans but also by shipping slaves across the Atlantic from Africa. Up to 15 million of them. In the North American colonies alone, Europeans extracted an estimated 222,505,049 hours of forced labour from African slaves between 1619 and 1865. Valued at the US minimum wage, with a modest rate of interest, that’s worth $97trn – more than the entire global GDP.

When should we be alarmed about so much wealth in so few hands? The Great Recession and its anemic recovery only deepened the economic inequality that’s drawn so much attention in its wake. Nearly all wealth and income gains since then have flowed to the top one-tenth of America’s richest 1%. The very wealthiest 400 Americans command dizzying fortunes. Their combined net worth, as catalogued in the 2015 Forbes 400 list, is $2.34 trillion. You can’t make this list unless you’re worth a cool $1.7 billion. These 400 rich people – including Bill Gates, Donald Trump, Oprah Winfrey, and heirs to the Wal-Mart fortune – have roughly as much wealth as the bottom 61% of the population, or over 190 million people added together, according to a new report I co-authored.

That equals the wealth of the nation’s entire African-American population, plus a third of the Latino population combined. A few of those 400 individuals are generous philanthropists. But extreme inequality of this sort undermines social mobility, democracy, and economic stability. Even if you celebrate successful entrepreneurship, isn’t there a point things go too far? To me, 400 people having more money than 190 million of their compatriots is just that point. Concentrating wealth to this extent gives rich donors far too much political power, including the wherewithal to shape the rules that govern our economy. Half of all political contributions in the 2016 presidential campaign have come from just 158 families, according to research by The New York Times.

The wealth concentration doesn’t stop there. The richest 20 individuals alone own more wealth than the entire bottom half of the U.S. population. This group – which includes Gates, Warren Buffet, the Koch brothers, Mark Zuckerberg, and Google co-founders Larry Page and Sergey Brin, among others – is small enough to fit on a private jet. But together they’ve hoarded as much wealth as 152 million of their fellow Americans.

OPEC members failed to agree an oil production ceiling on Friday at a meeting that ended in acrimony, after Iran said it would not consider any production curbs until it restores output scaled back for years under Western sanctions. Friday’s developments set up the fractious cartel for more price wars in an already heavily oversupplied market. Oil prices have more than halved over the past 18 months to a fraction of what most OPEC members need to balance their budgets. Brent oil futures fell by 1 percent on Friday to trade around $43, only a few dollars off a six year low. Banks such as Goldman Sachs predict they could fall further to as low as $20 per barrel as the world produces more oil than it consumes and runs out of capacity to store the excess.

A final OPEC statement was issued with no mention of a new production ceiling. The last time OPEC failed to reach a deal was in 2011 when Saudi Arabia was pushing the group to increase output to avoid a price spike amid a Libyan uprising. “We have no decision, no number,” Iranian oil minister Bijan Zangeneh told reporters after the meeting. OPEC’s secretary general Abdullah al-Badri said OPEC could not agree on any figures because it could not predict how much oil Iran would add to the market next year, as sanctions are withdrawn under a deal reached six months ago with world powers over its nuclear program. Most ministers left the meeting without making comments. Badri tried to lessen the embarrassment by saying OPEC was as strong as ever, only to hear an outburst of laughter from reporters and analysts in the conference room.

[..] Iran has made its position clear ahead of the meeting with Zangeneh saying Tehran would raise supply by at least 1 million barrels per day – or one percent of global supply – after sanctions are lifted. The world is already producing up to 2 million bpd more than it consumes.

The German government issued an unusual public rebuke to its own foreign intelligence service on Thursday over a blunt memo saying that Saudi Arabia was playing an increasingly destabilizing role in the Middle East. The intelligence agency’s memo risked playing havoc with Berlin’s efforts to show solidarity with France in its military campaign against the Islamic State and to push forward the tentative talks on how to end the Syrian civil war. The Bundestag, the lower house of the German Parliament, is due to vote on Friday on whether to send reconnaissance planes, midair fueling capacity and a frigate to the Middle East to support the French. The memo was sent to selected German journalists on Wednesday.

In it, the foreign intelligence agency, known as the BND, offered an unusually frank assessment of recent Saudi policy. “The cautious diplomatic stance of the older leading members of the royal family is being replaced by an impulsive policy of intervention,” said the memo, which was titled “Saudi Arabia — Sunni regional power torn between foreign policy paradigm change and domestic policy consolidation” and was one and a half pages long. The memo said that King Salman and his son Prince Mohammed bin Salman were trying to build reputations as leaders of the Arab world. Since taking the throne early this year, King Salman has invested great power in Prince Mohammed, making him defense minister and deputy crown prince and giving him oversight of oil and economic policy.

The sudden prominence of such a young and untested prince –he is believed to be about 30, and had little public profile before his father became king — has worried some Saudis and foreign diplomats. Prince Mohammed is seen as a driving force behind the Saudi military campaign against the Iranian-backed Houthi rebels in Yemen, which human rights groups say has caused thousands of civilian deaths. The intelligence agency’s memo was flatly repudiated by the German Foreign Ministry in Berlin, which said the German Embassy in Riyadh, Saudi Arabia, had issued a statement making clear that “the BND statement reported by media is not the position of the federal government.”

Germany’s interior minister expects the EU executive to propose new rules for protecting the bloc’s frontiers that would mean European border guards stepping in when a national government failed to defend them. Thomas de Maiziere spoke as he arrived on Friday for an EU meeting in Brussels where ministers will discuss how to safeguard their Schengen system of open borders inside the EU and Greece’s difficulties in controlling unprecedented flows of people arriving via Turkey and streaming north into Europe. Calling for the reinforcement of the EU’s Frontex border agency, whose help Greece called for on Thursday after coming under intense pressure from other EU states, de Maiziere said he expected an enhanced role for Frontex in proposals the European Commission is due to make on borders on Dec. 15.

“The Commission should put forward a proposal … which has the goal of when a national state is not effectively fulfilling its duty of defending the external border, then that can be taken over by Frontex,” he told reporters. EU states’ sovereign responsibility for their section of the external border of the Schengen zone is protected in the Union’s treaties. But the failure of Greece’s overburdened authorities to control migrant flows that have then triggered other states to reimpose controls on internal Schengen frontiers has driven calls for a more collective approach on the external frontier. Following diplomatic threats that it risked being shunned from the Schengen zone if it failed to accept EU help in registering and controlling migrants, Greece finally activated EU support mechanisms late on Thursday.

De Maiziere noted a Franco-German push for Frontex, whose role is largely to coordinate national border agencies, to be complemented by a more ambitious European border and coast guard system. He did not say whether new proposals would strengthen the EU’s ability to intervene with a reluctant member state. A Commission spokeswoman said the EU executive would make its proposal on Dec. 15 for a European Border and Coast Guard. German officials noted that the existing Schengen Borders Code provides for recommendations to member states that they request help from the EU “in the case of serious deficiencies relating to external border control.” Other ministers and the Commission welcomed Greece’s decision to accept more help from Frontex.

Austrian Interior Minister Johanna Mikl-Leitner said: “Greece is finally taking responsibility for guarding the external European border. I have for months been demanding that Greece must recognise this responsibility and be ready to accept European help. This is an important step in the right direction.”

The European Union is considering a measure that would give a new EU border force powers to intervene and guard a member state’s external frontier to protect the Schengen open-borders zone, EU officials and diplomats said yesterday in Brussels. Such a move would be controversial. It might be blocked by states wary of surrendering sovereign control of their territory. But the discussion reflects fears that Greece’s failure to manage a flood of migrants from Turkey has brought Schengen’s open borders to the brink of collapse. Germany’s Thomas de Maiziere, in Brussels for a meeting of EU interior ministers, said he expected proposal from the EU executive due on December 15 to include giving responsibility for controlling a frontier with a non-Schengen country to Frontex, the EU’s border agency, if a member state failed to do so.

“The Commission should put forward a proposal … which has the goal of, when a national state is not effectively fulfilling its duty of defending the external border, then that can be taken over by Frontex,” de Maiziere told reporters. He noted a Franco-German push for Frontex, whose role is largely to coordinate national border agencies, to be complemented by a permanent European Border and Coast Guard – a measure the European Commission has confirmed it will propose. Greece has come under heavy pressure from states concerned about Schengen this week to accept EU offers of help on its borders. Diplomats have warned that Athens might find itself effectively excluded from the Schengen zone if it failed to work with other Europeans to control migration.

Earlier this week, Greece finally agreed to accept help from Frontex, averting a showdown at the ministerial meeting in Brussels. EU diplomats said the proposals to bolster defence of the external Schengen frontiers would look at whether the EU must rely on an invitation from the state concerned. “One option could be not to seek the member state’s approval for deploying Frontex but activating it by a majority vote among all 28 members,” an EU official said. Under the Schengen Borders Code, the Commission can now recommend a state accept help from other EU members to control its frontiers. But it cannot force it to accept help – something that may, in any case, not be practicable. The code also gives states the right to impose controls on internal Schengen borders if external borders are neglected.

As Greece has no land border with the rest of the Schengen zone, that could mean obliging ferries and flights coming from Greece to undergo passport checks. Asked whether an EU force should require an invitation or could be imposed by the bloc, Swedish Interior Minister Anders Ygeman said: “Border control is the competence for the member states, and it’s hard to say that there is a need to impose that on member states forcefully.”On the other hand,” he said, referring to this week’s pressure on Greece, “we must safeguard the borders of Schengen, and what we have seen is that if a country is not able to protect its own border, it can leave Schengen or accept Frontex. It’s not mandatory, but in practice it’s quite mandatory.”